Oil prices breached multiple support levels as the tumult caused by the USA's banking sector reached the commodities market.
The US economy seems to be headed toward a recession as interest rates peak for the first time since 2007. The USA is the largest consumer of oil and a downturn in the economy could mean reduced demand. This has had a negative impact on the price of oil.
Yesterday, 3rd May, during the afternoon trading session WTI futures dropped by about 5%. The commodity was traded at $68.05 per barrel, a drop of more than 11% since the beginning of the month. This is a clear sign of a bearish market pushing the brakes on the price of oil.
The price of oil had made gains after OPEC+'s decision to scale back on production. Those gains are long lost.
Technical Analysis:
The two support levels that oil breached in the last 24 hours are $71.50 and the second level is roughly $70.00. This clear bearish trend led to a further sellout with prices expected to find support at the $66.25 level. If bears manage to break down the support at this level then we might see 2023 lows being hit.
On the positive side, the first psychological resistance level is $70.00. If the commodity overcomes this resistance we might see a break out to the $71.75 region.
(Source: DailyFX)
