Wed. Oct 5th, 2022
Crude Oil Update: Central Bank Hikes Weigh On Brent Ahead Of Baker Hughes

(MENAFN– DailyFX)
BRENT CRUDE OIL (LCOc1) TALKING POINTS

  • Stronger USD hurts on crude oil .
  • Additional rigs may sustain downside pressure.
  • $90 mark key for weekly close.

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Brent crude oil is trading below $90 per barrel after a slew of global interest rate hikes stemming from FOMC on Wednesday. Forward guidance from the Federal Reserve points to further monetary tightening to tackle inflation but adds to pressures on crude oil prices . The hawkish rhetoric also favors an elevated U.S. dollar and considering the traditionally inverse relationship between crude oil prices and the greenback, Brent crude may be vulnerable to additional downside.

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Later today, we have some key economic data in the U.S. (see calendar below), while oil related news comes via Baker Hughes rig count data which has shown a marked increase last week (in the U.S., Canada and internationally) and anything but a decrease could leave crude oil prices depressed as supply forecasts increase.

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ECONOMIC CALENDAR

Source: DailyFX Economic Calendar

Learn more about Crude Oil Trading Strategies and Tips in our newly revamped Commodities Module!

TECHNICAL ANALYSIS

BRENT CRUDE (LCOc1) DAILY CHART -UNDATED

Chart prepared by Warren Venketas, IG

Daily Brent crude price action has yesterdays long wick candle (yellow) indication following through to today with the September swing low in focus at 86.98. While it seems the psychological 90.00 level has turned resistance, we need to wait for the weekly close to give us further directional bias. A weekly close below 90.00 could point to added price weakness opening up the 85.00 support zone.

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Key resistance levels:

  • 92.90 (61.8% Fibonacci )
  • 20-day EMA (purple)
  • 90.00

Key support levels:

IG CLIENT SENTIMENT: BEARISH

IGCS shows retail traders are NET LONG on crude oil , with 77% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term bearish bias.

Contact and followWarrenon Twitter:@WVenketas

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