WTI crude oil appears to be closing below the bottom of its symmetrical triangle pattern on the short-term time frames, signaling that another downtrend is in the works.
Price is closing below $84 per barrel and might be in for a drop that’s the same height as the chart pattern, possibly taking it down to $76 per barrel next. The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside, and crude oil is trading below both moving averages to reflect bearish pressure.
However, stochastic is pulling higher after recently reaching the oversold region, reflecting a return in bullish pressure. If crude oil manages to climb back above the triangle bottom, it could set its sights back on the top around $88 per barrel.
RSI is on middle ground to reflect consolidation, barely offering strong directional clues at the moment.
Commodities took hits across the board when the Fed delivered a hawkish hike this week. Not only did they raise interest rates by 0.75% as expected, but policymakers also reiterated their plans to keep tightening in order to ward off inflation.
Sustained risk-off flows on expectations of lower business and consumer activity down the line might keep a lid on crude oil rallies, as higher borrowing costs would limit purchases of commodities.
Meanwhile, EIA crude oil inventory data turned out better than expected, as stockpiles grew by only 1.1 million barrels versus the projected build of 2.0 million barrels. This was also significantly lower than the earlier increase of 2.4 million barrels, suggesting that demand is elevated.
Geopolitical uncertainties following Putin’s declaration of partial military mobilization might also bring some upside for the commodity. Access to Russia’s oil has already been limited due to the ongoing war in Ukraine, so more signs of conflict could further dampen global supply.