Oil experiences a decline as investors assess the outlook for U.S. interest rate cuts.

FUNDAMENTAL OVERVIEW:

On Wednesday, oil prices continued to decline from the preceding session, as increasing beliefs that U.S. interest rate reductions will be delayed overshadowed ongoing apprehensions about attacks on shipping in the Red Sea.

The spread between April Brent futures and September contracts, referred to as backwardation and indicative of a market in high demand, reached its peak since October 31 on Monday at $3.64 per barrel. However, it has slightly eased and currently stands at approximately $3.37.

Yesterday, oil prices experienced a corrective phase, driven by the absence of additional conflict-related updates from global hotspots. The markets had to grapple with and come to terms with the prevailing concerns affecting the macroeconomic landscape.

Worries about a potential delay in Federal Reserve rate cuts have dampened the prospects for oil demand. The recent U.S. inflation data has shifted expectations for the Fed’s easing cycle, with economists surveyed by Reuters now predicting a cut in June rather than in the near future.

Efforts in Middle East diplomacy continue to face challenges. On Tuesday, Washington once again used its veto power to block a proposed United Nations Security Council resolution concerning the Israel-Hamas conflict, rejecting a call for an immediate humanitarian ceasefire. Instead, the U.S. is advocating for a resolution linking a ceasefire to the release of Israeli hostages by Hamas.

BRENT CRUDE OIL TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

Brent Crude Oil is currently trading within a down channel.

Brent Crude Oil is positioned below the 10&20 Moving Averages (SMA).

The Relative Strength Index (RSI) is in a Neutral zone, while the Stochastic oscillator suggests a Negative trend.

Immediate Resistance level: 5030.97

Immediate support level: 4995.91

HOW TO TRADE BRENT CRUDE OIL

Following a decrease, Brent Crude Oil entered a period of consolidation, attempting an upward movement. However, it encountered resistance from a previous resistance zone, leading to a decline. Currently, the commodity is trading around a support zone, and if this support level is breached, there is potential for further decline.

TRADE SUGGESTION- STOP SELL – 80.96, TAKE PROFIT AT- 78.75, SL AT- 82.56.