In early European trading on Monday, due to risk aversion and the Federal Reserve's hawkish bets to support the dollar's rebound, it was difficult for WTI crude oil price bulls to continue to gain the upper hand around $80.70. However, supply challenges from China and OPEC+ appear to be giving crude oil bulls hope.
The U.S. dollar index ended four days of losses near 102.25, even as U.S. Treasury yields failed to recover amid recession fears. U.S. 10-year and 2-year Treasury yields remained under pressure around 3.37% and 3.95%. The benchmark Treasury yield extended losses from the previous session, while reflecting a flight to safety amid fears of an economic slowdown.
Bearish bets on oil prices are accelerating as investors worry about the outlook for oil demand as fears of a global recession escalate in an environment where central banks are tightening policy. Recent U.S. data has revived fears of a recession in the world's largest economy, challenging the energy bulls. However, non-agricultural optimism brought back the Fed hawks, and the latest expectation is that the Fed will raise interest rates by 25 basis points in May. This provided support for the dollar and tested WTI crude oil bulls.
On the other hand, last week's unexpected production cuts by OPEC+ kept crude oil bulls hopeful.
Elsewhere, China's readiness to guard the global economy with strong monetary and fiscal easing at home also kept oil buyers hopeful amid optimism in the world's largest oil importer.
Next, the Easter holiday in the spot market on Monday may limit oil price moves, but bulls appear to have run out of fuel, so U.S. inflation and Federal Reserve meeting minutes will be closely watched for signs of a pullback.
Looking ahead, the release of US inflation data will provide more clear signals. The headline US consumer price index (CPI) is expected to decelerate to 5.2% from 6.0% previously. In addition, the core consumer price index is expected to rise further to 5.6% from the previous reading of 5.5%.
WTI Oil Price Technical Analysis
The two-hour chart shows that oil prices are consolidating in a narrow range around $79.00-$81.80, near horizontal resistance formed by the March 7 high around $81.00.
The 20-period exponential moving average (EMA) at $80.53 overlaps with oil prices, suggesting that prices remain range-bound.
Meanwhile, the Relative Strength Index (14) is oscillating in the 40.00-60.00 range, indicating that investors are focusing on a potential trigger point.
If oil prices break above the April 4 high near $81.80, bulls will push prices closer to the December 1 high of $83.30 and then the October 21 high of $85.66.
In addition, a break below the March 31 low of $73.31 would push prices to a March 23 high of $71.69. If oil prices break below that level, they will move closer to the March 27 low of $69.18.
WTI oil price two-hour chart
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