WTI falls over 2% on fears of Fed’s tightening plan, broad US Dollar strength

• Waller’s comments on monetary policy tightening send shockwaves through T-bond, Dollar, Gold, and WTI markets.
• China’s Q1 GDP, Industrial Production, and Retail Sales release to test the reality of the global economic outlook.
• WTI  Price Analysis: Remains in consolidation mode, with traders watching for potential breakouts above $82.09 or below $80.00.

Western Texas Intermediate (WTI) slid almost $2.00 on Monday as traders brace for additional tightening by the US Federal Reserve (Fed). Therefore, the greenback advanced against most commodities, and in the FX space, against most G10 currencies. At the time of writing, WTI is trading at $80.92 a barrel, down more than 2%.

Fed official’s comments boost the US Dollar as oil traders wait for China’s data

Sentiment shifted sour on expectations that the Fed will hike rates at the May 3 decision. Hence, the greenback advanced, as shown by the US Dollar Index, up 0.51% at 102.101. After reaching a YTD high of $83.46, WTI lost 3% after the Organization of Petroleum Exporting Countries (OPEC) announced the cuts of crude oil output.

The prospects for additional interest rate increases of the Fed had arisen and hurt WTI’s price. During the week, Federal Reserve officials in the names of New York Fed President John Williams, Governors Michelle Bowman, Lisa Cook, and Christopher Waller would be the latest policymakers to cross newswires before Fed officials enter the blackout period.

Waller’s comments last Friday spurred a jump in US T-bond yields, the US Dollar, and tumbled Gold and WTI prices. Waller commented that we “haven’t made much progress,” adding, “Monetary policy needs to be tightened further.”

Meanwhile, although the global economic outlook looks bright regarding China’s reopening, it would have a test of reality with the release of China’s Q1 Gross Domestic Product (GDP), March’s Industrial Production, and Retail Sales.

WTI Technical Analysis

After gapping up six dollars during the last week, WTI remains trading sideways, though it encountered solid support at $80.00 per barrel. However, downside risks remain below the latter, with the 200-day Exponential Moving Average (EMA) lying above the current price at $82.09 PB, a zone protected by sellers. But a break below $80.00 could expose the confluence of several EMAs, at the $78.20-90 area, before dropping towards the 50-day EMA At 76.93.