- Crude Oil surged on Wednesday before dropping once more.
- WTI rose to $80.00 before falling back to $78.50.
- Comments from Federal Reserve officials during the middle of the week caused Crude Oil prices to rise before falling back down.
WTI US Crude Oil prices surged to their peak in a week following comments from US Federal Reserve (Fed) Chairman Jerome Powell reassuring that the Fed does not perceive a heightened threat of recession in the US economy.
WTI rapidly changed direction and retreated to around $78.50. However, bids for barrels are still in positive territory on Wednesday following the Energy Information Administration (EIA) report showing Crude Oil Stocks changed lower than anticipated. This contributes to a less-than-anticipated rise in US barrel numbers reported by the American Petroleum Institute (API) on Tuesday evening.
Jerome Powell Sees No Signs of Recession in the US Economy
Chairman Powell appeared before the US Congressional House Financial Services Committee on Wednesday for the initial day of a two-day question-and-answer session regarding the Federal Reserve’s Semi-Annual Monetary Policy Report.
According to the Chairman of the Federal Reserve, he does not believe that there is a significant possibility of a recession occurring in the United States economy during the current 12 months. He also stated that adjustments to monetary policy are likely to begin in the coming months, provided that inflation continues to move closer to the target of 2% that the Federal Reserve has set for itself.
Despite a brief surge in expectations for a decrease in interest rates, investors are now reducing their optimism about taking risks prior to the release of the Nonfarm Payrolls (NFP) labor data in the United States on Friday. From the 11-month high of 353 thousand jobs added in January, it is anticipated that the number of new jobs added in February will drop to 200 thousand employees.
According to the API report made available on Tuesday, the United States Weekly Crude Oil Stock increased by only 423 thousand barrels for the week ending March 1. This figure was significantly lower than the predicted increase of 2.6 million barrels and considerably less than the increase of 8.428 million barrels that occurred the previous week.
During that period, the EIA’s Crude Oil stock change increased by 1.367 million barrels, which was lower than the prediction of 2.116 million barrels and lower than the surplus of nearly 4.2 million barrels that occurred the previous week.
The decrease in barrel numbers has given rise to optimism that the United States refining industry will begin to reduce the quantity of crude oil that is currently in the pipeline. WTI prices have been able to remain marginally higher than their previous levels as a result of this, with a peak increase of 3.25 percent occurring on Wednesday.
The Technical Outlook for WTI
WTI experienced a robust downward rejection from the $80.00 level on Wednesday, falling back to $78.50 after climbing 3.25% from the day’s low around $77.50. The price of US Crude Oil is currently higher for the day, increasing by approximately one percent from the initial cost of $77.72. However, with a technical support level at the 200-hour Simple Moving Average (SMA) of about $78.00, those looking to sell are currently influencing the short-term direction.
The daily candlesticks keep encountering resistance at the 200-day SMA around $77.85, while the $80.00 per barrel level is solidifying as a significant barrier.