WTI Price Analysis: Oil prices drop ahead of Powell’s speech

• WTI's price declined more than 1% to a low of $67.78.
• Markets remain cautious ahead of Powell’s speech on Wednesday.
• Strong economic data from the US fueled hawkish bets on the Fed.

On Tuesday, the West Texas Intermediate (WTI) barrel fell to a low of $67.78 and then stabilized at $68.23. A reprieve from potential Russia turmoil was probably the main factor weighing on Oil price after supply fears eased following Wagner Group’s decision to give up its march on Moscow. 

Optimistic Durable Goods and Housing sector data have increased hawkish bets on the Federal Reserve ahead of Wednesday’s speech by Jerome Powell at the European Central Bank (ECB) Forum in Sintra. This led to a recovery in the US Dollar, a further positive factor for Oil, although overall the Greenback is still down on the day, according to the US Dollar Index (DXY)

US Bond yields rise after strong US data.

The US Census Bureau reported the Durable Goods Orders from the US for May, increased by 1.7% concerning the previous 1.2% and above the consensus of -1%. Furthermore, there was a significant increase in New Home Sales during May, surpassing market expectations of a 0.5% change, and this surge demonstrated the housing market's resilience. 

Consequently, the DXY index recovered from a daily low of 102.32 to 102.50. The recovery in the US bond yields was also observed due to the strong economic activity, which suggests the possibility of a more aggressive approach by the Federal Reserve as more economic activity tends to be correlated with more inflationary pressures. Specifically, the 2-year rate rose from a low of 4.65% to 4.75%, and the 5-year and 10-year yields experienced an increase, reaching 4.00% and 3.76% respectively. 

For the rest of the session, the American Petroleum Institute will release Crude Oil Stocks for the week ending on June 23, which could have an additional impact on the black gold’s price dynamics.

WTI Levels to watch

According to the daily chart, the technical outlook for the WTI appears to be bearish for the short tem. In that sense, the Relative Strength (RSI) and Moving Average Convergence Divergence (MACD) suggest that the bulls have given up and that the sellers are now in control.

On the downside, support levels are seen at $67.80 followed by the $67.40 area and the $67.20 zone. On the upside, resistances line up at the 20-day Simple Moving Average (SMA) at $70.24 followed by the $70.50 area and the $71.00 psychological mark.

WTI Daily chart