WTI Oil Prices Dip Amid Concerns Over Potential Delay in Fed's Rate Cuts

WTI (West Texas Intermediate) oil prices continued their downward trend in early Monday trading, following a 2.2% decline on Friday. Market sentiment has taken a hit due to the possibility that unexpectedly high US inflation could postpone the anticipated Federal Reserve interest rate reductions.

The latest slump is a continuation of recent setbacks for oil prices, characterized by numerous rejections at higher levels and the consistent inability to end the week above a crucial Fibonacci resistance point. This resistance is identified at the $78.13 mark, which represents the 38.2% retracement of the downswing from $95.00 to $67.70. A temporary base had formed in the $78.50 to $78.90 zone, but prices failed to sustain this level.

The near-term technical picture for WTI oil has weakened, with the price breaching multiple converging daily moving averages, including the 200, 100, 20, and 10-day averages. Concurrently, the vanishing bullish momentum is demonstrated by a bearish engulfing pattern on the weekly chart, which amplifies the negative outlook.

Price deterioration has seen bears breakthrough a pivotal Fibonacci level of support at $76.04, a 38.2% retracement from the range of $71.40 to $78.90. Closing below this threshold would likely encourage fresh bearish activity targeting the levels of $75.34 to $75.15, where the daily Kijun-sen line meets the 50% retracement marker. A break below these levels could confirm a trend reversal.

The declining 10-day moving average, now at $76.75, is expected to serve as a robust barrier, capping any potential upside and maintaining the bearish stance in the near term.

Currently, resistance and support levels are as follows:

Resistance Levels:
R1: $76.99
R2: $77.65
R3: $78.50
R4: $79.27

Support Levels:
S1: $76.17
S2: $75.81
S3: $74.97
S4: $74.12

oil, markets, federal