Crude Oil Prices Fall as Rate Hike Threatens China Recovery Story

Crude Oil Prices Fall as Rate Hike Threatens China Recovery Story

By:Thomas Westwater

Crude Oil Prices Fall as Market Weighs More Rate Hikes

Crude oil prices (/CL) continued falling on Thursday as traders weighed the prospect of further rate hikes from the U.S. Federal Reserve. The commodity fell more than 2% to near the $77 a barrel level, extending losses from earlier this week. That move brought prices to the lowest level since March 31, when crude prices traded at $75.65 per barrel before surging higher in early April when OPEC announced that it would cut production levels in a surprise move to the markets.

The bullish optimism from OPEC’s move has been overtaken by the increasing likelihood of another U.S. rate increase. On Thursday, Loretta Mester, President of the Cleveland Federal Reserve Bank, signaled support for tightening monetary policy. Ms. Mester—who isn’t a current FOMC voter—said that policy will “need to move somewhat further into restrictive territory” and the pace of tightening depends on “economic and financial developments.”

China Likely Not Coming to the Rescue for Oil Bulls

China, the world’s second-largest oil consumer, buoyed sentiment earlier in the week after reporting a higher-than-expected 4.5% growth rate in the first quarter. Oil bulls were also impressed by rosy March data that showed refinery throughput hitting record levels. However, that optimism quickly faded, and more recently, Chinese data suggested that refiners are stockpiling oil.

The increased inventory may allow Chinese refiners to order less oil later this year, especially if prices rise. That would be a bearish turning point for the oil markets, especially if a U.S. recession occurs, which is currently seen as a likely possibility, albeit most forecasters are predicting a rather mild recession. The oil bulls hoping that a Chinese economic revival still has the juice to push crude prices higher may want to keep their attention on not only refinery throughput to gauge the market but also on calculations of inventory levels.

Crude Oil Price: Technical Outlook

Crude oil prices are down nearly 7% on the week, but prices have more room to fall when looking at the Relative Strength Index (RSI), which just recently crossed below its 50 mid-point level. A point of support at the March 31 high of $75.68 may offer an opportunity for some profit taking, given that it would close the gap higher from earlier this month.

crude oil price technical outlook

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on tastylive.com apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.