The Federal Reserve’s decision to hold off on raising interest rates until March has given some relief to the oil markets, with New York-traded West Texas Intermediate (WTI) crude settling up 1.3% at $76.68 per barrel, reducing its weekly loss to 3.8%. London-traded Brent crude also settled up 1.5% at $82.78, after losing 3.8% on the week. The Fed’s focus has shifted from the U.S. jobs report to the reading for consumer prices, due on Tuesday, with talk growing that the central bank will be kinder with its March rate hike.
The recent technical charts for WTI suggest that crude prices need to regain the $80 level they hit earlier this week in order to resume a bullish wave. According to Sunil Kumar Dixit, chief technical strategist at SKCharting.com, “WTI’s relief rally from $74.80 to $77.10 is still far from any signs of bullish rebound, which needs affirmation of strong acceptance above $80.30.”
The Fed’s cautious approach to interest rates has given hope to the oil markets, with experts predicting that the March rate hike could be less severe than previously expected. John Kilduff, partner at New York energy hedge fund Again Capital, said, “We have a more benign jobs number for February that could lead to a kinder Fed on rates. The only mystery now is what the inflation numbers tell us on Tuesday.”
The oil markets have been impacted by a range of factors, including the COVID-19 pandemic, supply chain issues, and weather events. However, the ongoing talks of the Fed’s rate hike have added to the uncertainty, with traders looking for any signs of relief. The oil markets have been on a rollercoaster ride in recent weeks, with prices surging to multi-year highs before falling back sharply.
In summary, the Fed’s decision to hold off on raising interest rates until March has given some relief to the oil markets, with both WTI and Brent crude prices rising slightly. Experts predict that the Fed’s March rate hike could be less severe than expected, providing hope for the oil markets. However, the technical charts suggest that crude prices need to regain the $80 level they hit earlier this week to resume a bullish wave. All eyes will be on the reading for consumer prices due on Tuesday, which will provide further insights into the direction of the oil markets.