Oil prices are expected to tumble further as the hawkish Fed has trimmed growth forecasts. (Pivot Orderbook analysis)

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• Oil prices are expected to tumble further as the hawkish Fed has trimmed growth forecasts.
• A slippage of oil prices below $82.28 will trigger a downside momentum.
• The build-up of oil inventories for a third consecutive week by EIA is hinting at a decline in oil demand.

The pair currently trades last at 83.27.

The previous day high was 86.54 while the previous day low was 82.41. The daily 38.2% Fib levels comes at 83.99, expected to provide resistance. Similarly, the daily 61.8% fib level is at 84.96, expected to provide resistance.

West Texas Intermediate (WTI), futures on NYMEX, are displaying a fragile pullback move after hitting a low of $82.28 in the early European session. The black gold witnessed a steep fall on Wednesday after failing to sustain above the critical resistance of $86.00. The oil prices were offered vigorously after the Federal Reserve (Fed) hiked the interest rates by 75 basis points (bps) consecutively for the third time.

Investors dumped longs in the black gold as Fed’s tightening measures call institutions to trim the growth projections further. The impact on oil prices would have been lower if Fed chair Jerome Powell would have announced a rate hike only. Escalation in terminal rates was in line with the projections of the market. However, the dictation of the strategic plan to fix the ramping up inflation spoiled the market mood.

Fed chair Jerome Powell is seeing interest rates at 4.6% by the end of 2023. The guidance has shifted much higher from 3.8%. Also, the Unemployment Rate is seen higher at 4.1%. Big tasks come with big sacrifices and the economic growth will face severe pain from the pace of hiking interest rates. A decline in economic growth projections will eventually drop demand for oil for a longer period.

Adding to that, the build-up of oil inventories reported by the Energy Information Administration (EIA) adds fuel to the fire. The EIA reported a build of oil stockpiles by 1.142. No doubt, the reading remains lower than consensus but a third consecutive inventory build-up indicates a sheer decline in oil demand.

Technical Levels: Supports and Resistances

XTIUSD currently trading at 83.27 at the time of writing. Pair opened at 82.94 and is trading with a change of 0.4 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 87.32, 50 SMA 90.69, 100 SMA @ 99.82 and 200 SMA @ 96.36.

The previous day high was 86.54 while the previous day low was 82.41. The daily 38.2% Fib levels comes at 83.99, expected to provide resistance. Similarly, the daily 61.8% fib level is at 84.96, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 81.39, 79.84, 77.26
• Pivot resistance is noted at 85.52, 88.09, 89.64

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