The oil prices have climbed to near $77.50 as the Fed has ditched a bigger rate hike regime. (Pivot Orderbook analysis)

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• The oil prices have climbed to near $77.50 as the Fed has ditched a bigger rate hike regime.
• US recession risk has not faded yet as the Fed has hiked its terminal rate projection to 5.1%.
• A solid build-up of oil inventories reported by the EIA has failed to weaken the black gold.

The pair currently trades last at 77.3.

The previous day high was 77.76 while the previous day low was 74.96. The daily 38.2% Fib levels comes at 76.69, expected to provide support. Similarly, the daily 61.8% fib level is at 76.03, expected to provide support.

West Texas Intermediate (WTI), futures on NYMEX, have displayed a bullish three-session spell on hopes of a recovery in global economic prospects. The oil prices have climbed above $77.50, recovered dramatically after registering a fresh annual low at $70.61 last week, as the Federal Reserve (Fed) has ditched the bigger interest rate regime.

Termination of the 75 basis points (bps) interest rate hike spell by the Fed is the result of a slowdown in the United States Consumer Price Index (CPI), consecutively for two months. The headline US CPI that inculcates oil and food prices in calculation dropped to 7.1% from the prior release of 7.7%. This has trimmed the risk of recession in the US economy for a while but the recession risk has not faded yet as the Fed policymakers have advocated for a higher terminal rate at 5.1% by the end of CY2023.

Also, Fed chair Jerome Powell has promised to keep policy restrictive enough to achieve a 2% inflation rate. The US Dollar Index (DXY) is hovering around 103.62 after displaying wild gyrations. The US Dollar is expected to display weakness further as the Fed has approved a smaller and slower interest rate hike approach, which will eventually support oil prices.

The oil prices have not reacted much to the solid build-up of oil inventories reported by the official US agency. The US Energy Information Administration (EIA) has reported a build-up of oil stockpiles by 10.231M for the week ending December 09.

Meanwhile, investors are awaiting updates on the Keystone pipeline restart from Canada’s TC Energy Corp. Last week, the 622,000 barrel-per-day pipeline was shut after leaking oil into a creek in Kansas. Over that, the firm will provide an update ahead, as reported by Reuters.

Technical Levels: Supports and Resistances

XTIUSD currently trading at 77.3 at the time of writing. Pair opened at 77.39 and is trading with a change of -0.12 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 77.32, 50 SMA 83.08, 100 SMA @ 85.38 and 200 SMA @ 95.34.

The previous day high was 77.76 while the previous day low was 74.96. The daily 38.2% Fib levels comes at 76.69, expected to provide support. Similarly, the daily 61.8% fib level is at 76.03, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 75.65, 73.9, 72.84
• Pivot resistance is noted at 78.45, 79.51, 81.25

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