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Crude Oil Steady as Investors Stay on the Sidelines Ahead of Fed Decision

Kenny Fisher

Crude oil is flat in Tuesday trade. In the North American session, West Texas Intermediate crude oil futures are trading at $59.22, up $0.34 or 0.58%. Brent crude oil futures are trading at $64.38, up $0.34 or 0.53%.

WTI is coming off its best weekly performance since mid-September, after posting strong gains of 6.7 percent. Investors gave a thumbs-up to a sparkling nonfarm payrolls report on Friday and OPEC’s announcement that it would implement further production cuts, effective January 1. This move, engineered by Saudi Arabia, was taken in order to stabilize oil prices in an environment of a huge oversupply of crude on global markets. At the same time, some OPEC members are notorious for failing to adhere to their production quotas, and if the new agreement is not adhered to, oil prices could head lower.

Will Fed Statement Affect Crude Prices?

The Federal Reserve will be in the spotlight on Wednesday, when rate-setters conclude a two-day policy meeting. The Fed is almost certain to maintain current rate levels. The Fed has signaled a pause in rate cuts, after trimming rates on three occasions this year. This means that the upcoming rate statement and comments from senior Fed officials will be closely scrutinized and could shake up oil prices. The U.S. economy has posted solid numbers lately, and if policymakers sound positive about economic conditions, crude prices could respond with gains.

 

Technical Analysis

WTI/USD continues to put strong pressure on resistance at 59.25. If the pair can break above this line, the symbolic level of 60.00 will be vulnerable.

On the downside, we have support levels at 58.50 and 57.50. This is followed by the 200-EMA at 57.08 and the 50-EMA at 56.65. The next support level is at 56.50. With crude facing significant support barriers, the trend remains upward.

WTIUSD 1-Day Chart

This article was originally posted on FX Empire

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