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| Oil prices drop amidst supply concerns and mixed market sentiment ahead of key PMIs |
WTI crude oil prices have continued to fall, with the black gold refreshing intraday lows of around $69.15 early on Friday. The decline in oil prices is justified by market fears of an economic crisis, which have been amplified by recent bank fallouts, as well as the possibility of more rate hikes from the US Federal Reserve (Fed). While US Energy Secretary Jennifer Granholm has suggested more US buying to refill the reserves, her comments about the possibility of taking years to refill the oil reserve have not convinced black gold buyers.
Furthermore, mild risk aversion and a pause in the US dollar and Treasury bond yields have added to the pressure on WTI crude oil. The collapse of banking shares and reports that the Fed's emergency lending to banks has ballooned the balance sheet, renewing fears of more Fed rate hikes, have also contributed to the decline in oil prices.
Mixed US data and comments from US Treasury Secretary Janet Yellen have further weighed on WTI prices. Yellen has stated that China and Russia may want to develop an alternative to the US dollar, while also showing preparedness for additional deposit actions `if warranted'. The first readings of activity numbers from the US, Europe, and the UK for March will be crucial for WTI crude oil traders, and could impact the energy benchmark's price.
Technical analysis suggests that unless the WTI crude oil crosses an upward-sloping resistance line from March 16, around $71.80 at the latest, the bears are all set to retest the 100-Hour Moving Average (HMA) level surrounding $68.65. Therefore, it remains to be seen whether the PMIs will be upbeat or negative and whether the black gold will experience an upside momentum or continue its downward trend.
