Oil prices retreat due to China data and Fed rate decision anticipation
Oil prices steady amid market caution
Crude oil prices edged lower on Tuesday as traders exercised caution ahead of the U.S. Federal Reserve's interest rate decision. West Texas Intermediate (WTI) was trading at $70.37 per barrel, while Brent crude stood at $73.67 per barrel, both slightly down from Monday’s close. Market sentiment was dampened by mixed economic data from China, the world’s largest oil importer. China's industrial production grew by 5.4% in November, beating forecasts of 5.3%. However, retail sales slowed to 3% year-on-year, well below October’s 4.8% expansion. This imbalance heightened concerns about China’s economic recovery, causing oil traders to adopt a more cautious stance.
USOIL chart ( May 2024 - December 2024) Source: Trading View
Technical outlook: key levels to watch
WTI crude oil maintained a bullish tone, trading at $70.42, supported by the 50-day EMA at $70.04 and the 200-day EMA at $69.37. Immediate resistance sits at $71.38, with a potential upside target of $72.23 if the price breaks higher. On the downside, key support levels are marked at $69.95 and $69.11.
Similarly, Brent crude oil held firm at $74.05, supported by the 50-day EMA at $73.59 and the 200-day EMA at $73.02. A push above $74.55 could see Brent testing $75.35, while a dip below $73.64 might drive prices toward $72.87.
Traders remain fixated on the upcoming Fed meeting, where a 25 basis point rate cut is expected. However, the scale of the cut remains uncertain, keeping market participants on edge. Meanwhile, the EU’s latest sanctions against Russia have yet to impact oil prices, as Russian exports continue through non-EU vessels.
Previously, we discussed oil prices holding firm due to supply concerns and geopolitical risks linked to sanctions on Russia and Iran.
