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Jerome Powell's Comments Put Pressure on the Price of Crude Oil

3/8/2023 1:29 PM

The quotations of Brent Crude Oil have been steadily growing for more than two weeks. Earlier, the price rose to 86.50, but then sharply corrected down to 82.80 (Murray level [5/8]) against the background of statements made by the chairman of the US Fed Jerome Powell in Congress.

Speaking before the Senate Banking Committee, the official noted that "the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated." Powell also confirmed that the fight against rising inflation is not over yet, and the pace of interest rate increases can be increased if necessary. These comments convinced experts that the US Fed's monetary policy tightening cycle will last longer than expected, and the peak value may be 5.75% or even 6.00%. All this will lead to further support of the US currency and pressure on alternative assets.

An additional negative impact on the quotes was caused by weak data on Chinese oil imports, which decreased by 6.8% in January and February, despite the lifting of quarantine restrictions. This statistic raises concerns that the Chinese economy will grow more slowly in the near future than predicted, and the demand for "black gold" in the second world economy may remain quite weak. Nevertheless, experts are generally optimistic, believing that by the end of the year the economic situation in China will improve, and the American economy will not fall into recession. All this should lead to an increase in global consumption of petroleum products and support prices.   

Technically, the price is testing the mark of 82.80 (Murray level [5/8]), consolidation below which will give the prospect of developing movement to the levels of 81.25 (Murray level [4/8], the bottom line of the ascending channel), 79.69 (Murray level [3/8]). The key for the "bulls" is the level of 84.38 (Murray level [6/8]), supported by the middle line of the Bollinger Bands. If it is broken out, the price will be able to continue growing to the area of 87.50 (Murray level [8/8]) and 89.06 (Murray level [+1/8]).

Technical indicators do not give a single signal: the Bollinger Bands reverse horizontally, the MACD histogram is near the zero zone, its volumes are insignificant, and the Stochastic is directed downward.

Resistance levels: 84.38, 87.50, 89.06. | Support levels: 82.80, 81.25, 79.69.

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