Crude Oil Pushing Towards $60Crude oil has flexed some muscle in the North American session and is putting pressure on the key $60 level.
Oil prices showed some movement on Wednesday, after the Energy Information Administration (EIA) surprised the markets with a surplus. Granted, the gain was only 0.8 million barrels, but analysts had predicted a significant decline of 2.9 million. There is a large oversupply of crude on global markets, which is putting downward pressure on crude. Since mid-September, the EIA report has shown surpluses in ten of the past twelve releases.
Fed Sends Markets Dovish Message
There were no surprises as the Federal Reserve maintained the Federal funds rate at a range between 1.50% and 1.75%. However, FOMC members were more dovish than the markets had anticipated, which put pressure on the U.S. dollar.
Fed Chair Jerome Powell said that the U.S. economy was performing well, despite difficulties in global economic conditions. Still, it was apparent that the Fed was in a dovish mood, as the “dot plot” of FOMC members’ future projections showed a pronounced downward shift compared to the previous meeting in September. Thirteen of the seventeen FOMC members projected no change in current rate levels until 2021. Back in September, eight members projected no changes in rates, while nine members expected one or more increases in 2020. FOMC members maintained the GDP forecast of 2.2% for 2019, but lowered its inflation forecast for 2019 to 1.6%, compared to 1.8% in September.
WTI/USD has broken above resistance at 59.25 early in the North American session. The pair is putting pressure on the 60.00 level, which has psychological significance. This line has not seen action since mid-September.
On the downside, 58.50 has some breathing room in support as the pair has moved higher. Below, there is support at 57.50. This is followed by the 200-EMA at 57.10 and the 50-EMA at 56.82. With crude facing significant support barriers, the trend remains upward.