Key Takeaways:
*Prices dropped from $65.10 to near the critical $63.00 level, the steepest single-day fall in August, raising bearish risks.
*Trump’s firing of Fed Governor Cook and upcoming U.S. tariffs on India fueled risk-off sentiment and demand concerns.
*Today’s inventory report could be pivotal, with a surprise build threatening a deeper drop below $63.00.
Market Summary:
Oil futures fell sharply in the latest session, retreating from a weekly high near $65.10 to decline more than 2%—marking the largest single-day drop this month. The sell-off brought prices near the critical technical and psychological support level of $63.00, a breach of which could signal a decisive shift toward a bearish near-term outlook and trigger further momentum-driven selling.
The downturn was fueled primarily by a broad deterioration in risk sentiment following the unexpected dismissal of Federal Reserve Governor Lisa Cook by former President Donald Trump. The move has raised fresh concerns over central bank independence and long-term U.S. policy predictability, prompting a flight from risk assets—including commodities.
Further pressuring prices, the U.S. is poised to implement tariffs on India beginning Wednesday, in response to that country’s continued imports of Russian crude. While intended as a punitive measure, the tariffs have stoked fears of a broader slowdown in global trade and economic activity, potentially dampening energy demand.
Market participants are now turning to today’s U.S. crude inventory report for near-term direction. A larger-than-expected draw in stocks may provide temporary support and help stabilize prices around current levels. Conversely, an unexpected build would likely intensify selling pressure, increasing the likelihood of a break below $63.00 and opening the door to a test of lower technical supports.
Oil prices staged a solid rebound from the $62.55 support level, reversing their previous downtrend and rallying nearly 5% to approach the $66.00 mark. However, the momentum has since cooled, with prices retracing to the critical 61.8% Fibonacci level near $63.80.
A rebound from this level could signal a continuation of the recent bullish rally, while a decisive break below it may indicate that the uptrend has been compromised, opening the door for further downside.
From a technical perspective, the RSI failed to break into overbought territory, while the MACD has formed a bearish crossover above the zero line—both signaling that bearish pressure may be building in the oil market.
Resistance Levels: 65.45, 67.90
Support Levels: 62.60, 60.40
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