WTI crude oil traces dicey markets ahead of FOMC as bears flirt with five-week low near $71.50

• WTI crude oil treads water after positing the biggest daily loss in eight months.
• Mixed plays between anticipated rate hikes and China-led optimism prod Oil traders amid pre-Fed anxiety.
• API inventories, hawkish Fed bets keep energy bears hopeful ahead of WTI crude oil stockpile, FOMC.

WTI crude oil stays depressed at the lowest levels since late March, poked the previous day, as energy bearish make rounds to $71.50 during early Wednesday in Europe. In doing so, the black gold price takes clues from the dicey markets ahead of the Federal Open Market Committee (FOMC) monetary policy meeting announcements.

Apart from the pre-Fed anxiety, mixed plays between the hopes of more demand from China and fears of higher rates, as well as banking woes, also exert downside pressure on the black gold prices. On the same line could be the weekly Oil inventories per the industry report. That said, the American Petroleum Institute (API) said that the Weekly Crude Oil Stock declined by -3.939M during the week ended on April 28 versus -6.083M prior.

It’s worth noting that the International Monetary Fund (IMF) raised economic forecasts of the Asia-Pacific zone in its latest report while also adding, “Asia and Pacific will be the most dynamic of the world's major regions in 2023, predominantly driven by the buoyant outlook for China and India.”

On the other hand, recently upbeat inflation signals from the US keep the Fed hawks hopeful even as the White House blames the US central bank’s higher rates for banking fallouts. Late Tuesday, a top White House (WH) Economist Heather Boushey, a member of the White House Council of Economic Advisers, told Reuters that the Fed is raising interest rates in the hope of reducing inflation. That is having this negative effect on the banking sector. “Why would we add to that?,” said WH Economist Heather Boushey.

Elsewhere, chatters of no major output cuts from the OPEC+ group during 2023 and likely easing in supply crunch, due to heavy floating of Oil in Moscow, weighs on the Oil price.

On a different page, a Reuters survey found that OPEC oil output fell 190,000 barrels-per day in April, mainly driven by Iraq and Nigeria. Output is set to drop further in May as a new round of voluntary cuts unveiled on April 2 takes effect,” per the news.

Looking forward, weekly inventory data from the US Energy Information Administration (EIA), expected -1.0M versus -5.054M, will join the Fed’s announcements to direct intraday Oil prices move.

Technical analysis

A clear downside break of an ascending trend line from March 17, now immediate resistance near $74.70, keeps WTI crude oil bears hopeful of breaking the $70.00 psychological magnet.