Growth concerns have finally pulled crude oil prices below a key trend line support.
Will this mean more losses for the commodity?
Here’s the 4-hour chart that I’m looking at today:
Brent Crude Oil: 4-hour
As you can see, crude oil prices have taken a downturn since last week after the Fed raised its interest rates by a sharper-than-expected 75 basis points.
The Fed’s move and tightening efforts of other central banks have brought global slowdown concerns under the markets’ spotlight.
Brent crude oil is now trading closer to $109.00, which is already waaay below a trend line support that had been holding since mid-April.Both the 100 and 200 SMAs have also turned lower on the 4-hour time and are supporting a possible trend change.
Will we see more losses for the Black Crack?
Word around is that U.S. President Biden will urge Congress to suspend the gas tax over the summer months. Biden is also set to meet with U.S. oil refiners this week to ask them to produce more gasoline and diesel.
Looks like the POTUS is working on the supply side of crude oil’s supply and demand!
Meanwhile, Powell’s testimony before the Senate Banking Committee later today should remind traders that the Fed isn’t done raising rates just yet.
If we see more updates on the U.S. government’s efforts to bring down oil prices, or if traders focus on Powell’s testimony today, then Brent crude oil could extend its losses.
Brent crude could drop all the way to the $105.00 – $106.00 zone depending on the momentum we see in the next trading sessions.
If Biden gets enough pushback, however, or if Powell calms markets with talks of an end in sight for the Fed’s tightening plans, then risk assets could pick up and push Brent crude back above the 4-hour trend line.
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