Oil prices are stabilizing after an active fall amid a banking crisis. However, despite a slowdown in decline, there is still a downtrend. All investors’ attention is now focused on the Fed meeting on Wednesday. According to analysts’ forecasts, the Fed will slow the rate of monetary policy tightening. Although inflation is rising, the decision to increase rates by only 0.25% is expected at the following meeting on Wednesday.
In the current situation it is extremely difficult to predict the Fed’s actions. On the one hand, inflation is high and rates should be kept high as well. On the other hand, problems in the banking sector give reason to ease the policy of the regulator. The Fed is likely to stick to its previously announced strategy and raise rates by 0.25%. However, this will not impede the regulator from filling the market with liquidity as well if needed. Rate hikes will be an expected, but negative scenario for commodities.
Oil prices could not be supported even by a rise in China’s demand.
According to Iran’s oil minister, this year the country has sent abroad 83 million barrels of oil more than last year. It was the highest level of fuel supply since the reintroduction of U.S. export restrictions.
Iran’s expansion of oil export also negatively affects the price, as domestic oil flows now are spreading across the world and increasing supply. Meanwhile, oil deficit is forecast only in the second half of the year.
According to the technical analysis, oil is in a slight downtrend. Now the price is moving close to its upper boundary, giving a chance to open short positions. When drawing the Fibonacci levels on the rebound of the bank panic, we see the downside target at the level of $69.50. The Stop-loss might be set when a new rising trend is formed and oil local highs over the last trading days are updated. This is the level of $76.15.
Brent oil is likely to decline:
Take profit – 69.50
Stop-loss – 76.15
This content is for informational purposes only and is not intended to be investing advice.
