Crude oil price edged lower on Tuesday ahead of the Fed interest rate decision. The decline is also observable in other risk assets as the US dollar strengthens.
Crude oil price was in the red on Tuesday as markets focus their attention on the Fed interest rate decision scheduled for release on Wednesday. High interest rates have strengthened the US dollar in recent months while weighing on risk assets.
On the data front, figures from the American Petroleum Institute (API) showed that US oil inventories rose by 1.035 million barrels in the week that ended on 16th September. The build was lower than the prior week’s 6.035 million and economists’ forecast of 2.321 million barrels. Storage facilities in the country have recorded an increase in oil inventories since late August; an aspect that adds to the demand concerns.
Crude oil price prediction
As indicated in a recent article, I expect Brent oil to remain within the downward channel highlighted in red in its daily chart. Indeed, it continues to trade below the 25 and 50-day exponential moving averages.
Based on both the fundamental and technical indicators, crude oil price will likely remain below the 50-day EMA at 97.70. In fact, a move above this level will invalidate this bearish thesis.
With that in mind, the range between the recent low of 87.25 and the 25-day EMA at 94.82 will be worth watching in the ensuing sessions. As a reaction to the Fed policy decision, the bears may push Brent oil to 85 before bouncing back to the aforementioned range.