Oil Prices Near Pre-War Levels on Supply, Fed Risks

The bearish bias for WTI crude oil remains intact as traders remove the war premium and anticipate increased supply in the coming months. The Fed's tightening monetary policy further contributes to this bearish outlook by suppressing demand.

Short-term upside risks include a renewed breakdown of peace between the US and Iran, a closure of the Strait of Hormuz, or US inflation data surprising to the downside, which would lead to a dovish repricing by the Fed. Technical analysis indicates crude oil is targeting the $68.00 handle, where buyers are expected to step in, aiming for a rally to $78.00.

Sellers, conversely, will target $55.00 if $68.00 breaks. Upcoming catalysts include US Jobless Claims and PCE report tomorrow, and the University of Michigan consumer sentiment survey on Friday.