Oil fell the most since early January as Federal Reserve Chairman Jerome Powell’s hawkish testimony to lawmakers pushed the commodity lower through multiple layers of technical support.
Powell’s message that the central bank may raise rates faster than expected, and to a higher end point, bolstered a bearish case based on rising US inventories and a target for economic growth from China weaker than expected. His message broke a five-day rally for West Texas Intermediate and pushed crude oil below its 50- and 100-day moving averages.
“If the Fed decides we’re going to strangle inflation until it cries uncle, and so raise interest rates to the point where there’s pain throughout the economy, that’s not good for GDP,” said Stewart Glickman, director attached of equity research at CFRA Research. “Oil demand is correlated with GDP, so this would be bad for oil prices.”
Crude oil has traded in a narrow channel all year as the outlook for rising Chinese demand and disappointing US consumption keep prices in a tight range.
Prices:
- WTI for April delivery fell $2.88 to settle at $77.58 a barrel in New York.
- Brent for May settlement fell $2.89 to settle at $83.29 a barrel.
