Crude Oil Drops Towards $110 As Recession Fears Rise

0

Crude oil has shown extreme resilience over the past three and a half months, after being bullish for two years already. The conflict in Ukraine was a reason for the increase in oil prices and the costs of all other goods and services. As a result, US crude oil WTI surged to near $130.

We saw a retreat below $100, but the pressure remained bullish and US Oil rose above $123 on Tuesday this week. And this despite the blockages in China and the central banks that have become belligerent. But central banks have recently accelerated the pace of rate hikes, which will surely put the respective economies into recession and depress demand for oil. But we’ve seen that every dip has been bought aggressively, showing that the establishment wants expensive Oil to make the transition to renewables.

Although they can only hold it until the whole market goes against oil and that starts to happen. OPEC is increasing production as Russian oil continues to flow to China and India. But the main reason oil is turning bullish is the looming recession that governments and central banks are headed to their countries as they continue to raise interest rates and allow prices to soar.

Since breaking above $123 earlier this week, the U.S. WTI Crude Oil reversed lower and on Friday crashed around $10, falling below $110 before making a small reversal in the final hours of trading of the week and closing above- above this high level.

Crude Oil Daily Chart – WTI Surpassing All MAs

The 100 SMA (green) turned into resistance after the rebound from the 200 SMA (purple)

The main concern for oil right now is macro. There is a growing feeling that the global economy will slow down in the coming months, perhaps dramatically. There are few assets more sensitive to global growth than oil. There is also a series of shifting beliefs around Russia and whether they can extract oil. Yesterday, Foreign Minister Novak struck a confident tone after Putin’s positive comments.

Russian President Vladimir Putin

  • Restoring relations with Ukraine is inevitable
  • Ready to restore relations with everyone after the military intervention in Ukraine

WTI

Share.

About Author

Comments are closed.