Last week, crude oil prices saw a significant tumble as the market reacted to OPEC+’s production maneuver. The move resulted in a gap up open from April 3 that needed to be filled. However, by the end of the week, crude oil prices saw a near 3% rebound, filling the gap and reducing uncertainty in the oil market.
Despite the rebound, the question remains – where do crude oil prices go from here?
Potential Fed Rate Hike Looms Over Markets
The coming week may bring more volatility to the crude oil market, as the potential for a Fed rate hike looms over the economy. While some analysts predict higher prices if the US economy grows close to 1.7% in the second quarter, the possibility of more monetary tightening could lead to measured gains and volatility.
“The pulse of the U.S. economy is not too bad if you ask the Atlanta Fed and if the U.S. economy comes anywhere close to growing at 1.7% in the second quarter, oil prices will probably be much higher,” said Ed Moya, an analyst at online trading platform OANDA.
Technical Selling and Uncertainty in the Oil Market
Last week’s significant tumble in crude oil prices was driven by technical selling, which would not have ended until the gap up open from April 3 was filled. This uncertainty in the oil market has been a concern for investors, as they try to navigate the potential impact of OPEC+’s production maneuver and the looming Fed rate hike.
Despite the uncertainty, some analysts remain optimistic about the future of crude oil prices. If the US economy continues to grow and global demand for oil remains strong, prices could see significant gains in the future.
Conclusion
The crude oil market saw a significant rebound last week, filling the gap up open from April 3 and reducing uncertainty in the market. However, the looming Fed rate hike and potential for more monetary tightening could lead to measured gains and volatility in the coming weeks.
While some analysts predict higher prices if the US economy grows close to 1.7% in the second quarter, the future of crude oil prices remains uncertain. Investors will need to carefully monitor the market and consider the potential impact of global events on the oil industry.
