Crude Oil Price Outlook:
- Crude oil prices[1] received a bump last week, approaching $57 a barrel
- Still, demand concerns have flared as global growth shows continued signs of slowing
- That said, crude oil could fall under pressure in the coming days if the Fed is less dovish than anticipated
Crude Oil Price Outlook Looks Bearish at Resistance Ahead of FOMC
Crude oil finds itself at a crossroad as price approaches the 200-day moving average, but fundamentals look to keep the commodity in check. In October, however, OPEC announced it would reduce output in 2020 due to lower demand forecasts – a byproduct of slowing global growth. Consequently, crude oil rallied to trendline resistance around $57 and could look to reclaim the 200-day moving average and continue higher.
That said, Wednesday’s Fed meeting could look to derail the commodity’s rebound. A 25-basis point cut is widely expected, but market participants are less confident in the subsequent forecast. With that in mind, there is potential for the Fed to disappoint the market. Should the central bank signal October’s cut marks the end of a “mid-cycle adjustment,” it could translate to weaker growth forecasts.
With Hong Kong’s economy slipping into recession,[2] weakening retail sales data in the United States and worrisome growth forecasts from various intergovernmental economic bodies, the argument for a global recession has only firmed. Therefore, crude’s demand outlook - and by extension price - could falter in the weeks ahead should the Fed offer a relatively hawkish lean.
Crude Oil Price Chart: Daily Time Frame (January – October) (Chart 1)
In the meantime, a descending trendline from October 2018 and the 200-day moving average will look to keep crude oil prices under $58. If technical barriers and the fundamental landscape align to push
