Crude Oil Market Outlook Darkened by Debt Ceiling Debacle and Recession Dangers


  • Oil costs fall for the fourth straight week, an indication bears stay on the steering wheel
  • Rising recession dangers, along with the U.S. debt ceiling deadlock are prone to weigh on vitality markets within the close to time period
  • This text seems at key tech ranges to look at on oil’s each day chart

Beneficial by Diego Colman

Get Your Free Oil Forecast

Most Learn: Gold Costs Veer Off Bullish Path as US Greenback Companies however Outlook Nonetheless Upbeat

Crude oil costs (as measured by West Texas Intermediate front-month futures) retreated on Friday, settling barely above $70.00 per barrel, and shutting decrease for the fourth consecutive week, dented by rising fears of a U.S. recession and its adversarial results on cyclical commodities.

Though the U.S. just isn’t but in recession, market indicators, such because the inversion of the yield curve, recommend that one may arrive quickly. Granted, the outlook stays fluid and topic to vary, however the latest turmoil within the U.S. banking sector has strengthened draw back dangers, rising the probability of a downturn later this yr.

The U.S. has the world’s largest GDP, so a recession may severely curtail world progress, decreasing demand for fossil fuels throughout the board. This might have a detrimental affect on oil costs, with most losses probably concentrated firstly of the droop, given markets’ forward-looking nature.

The U.S. debt ceiling debacle is making issues worse for vitality commodities. Whereas the U.S. hit its debt restrict in January, the Treasury Division has been capable of proceed paying its payments by using extraordinary measures, however out there money may run out as quickly as early June if the federal authorities fails to take corrective motion.

If the nation’s borrowing cap just isn’t raised quickly, a default may happen in a matter of weeks, triggering catastrophic penalties for the financial system and the monetary system. Most probably, Democrats and Republicans will attain a deal on the eleventh’s hour, however that will solely occur as soon as markets start to convulse and fall off the cliff.

Within the present atmosphere, oil costs will stay subdued, which means extra losses may very well be on the horizon. With sentiment on skinny ice, market circumstances may turn out to be fairly treacherous within the blink of a watch, so merchants ought to rigorously monitor headlines within the coming days to stop being caught on the unsuitable facet of the commerce.

Beneficial by Diego Colman

The way to Commerce Oil


By way of technical evaluation, WTI oil is sitting above trendline assist close to the $70.00 mark after latest losses. If bulls fail to defend this ground and sellers drive costs under it decisively, a deeper decline towards $66.00 may very well be within the making. On additional weak point, bears may problem the 2023 lows.

On the flip facet, if costs rebound from present ranges, preliminary resistance seems at $72.00. A profitable transfer above this barrier may open the door for a rally towards $73.75, adopted by 76.50.


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Change in Longs Shorts OI
Every day 3% -5% 1%
Weekly -3% 20% 1%

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