Brent crude could be affected by the FOMC meeting minutes through the greenback
Oil prices dipped dramatically from fresh long-term highs on Tuesday. Brent crude managed to derive support from the ascending 20-DMA to bounce marginally today. Still, the futures lack recovery momentum to regain the $76 figure so far.
The sell-off was triggered by the reports that OPEC producers canceled as major players failed to come to an agreement on supply. Earlier, oil rallied on news of the breakdown in talks. Now, there are reports that the OPEC+ alliance would resume discussions as soon as this week. The key risk here is that the impasse could lead to a price war, which would be negative for the market.
In this context, oil market volatility should remain elevated in the coming days, with downside risks increasing amid overbought conditions. Also, Brent crude could be affected by the FOMC meeting minutes through the greenback. A more hawkish tone by the central bank would trigger a rally in the greenback and thus could put oil futures under selling pressure later today.
Besides, traders await fresh industry data out of the United States. Later today, the API reveals its inventory data, followed by the official report from the EIA due on Thursday. Bearish estimates would add to downside pressure, with Brent looking more vulnerable following a 3.5%-plunge seen yesterday.
In the longer term, sentiment in the oil market will be affected by the OPEC+ group actions along with the overall sentiment in the global financial markets. Also, traders will continue to monitor global economic recovery in the context of energy demand. Signals from major central banks will also matter for the commodities in general.
Now, Brent needs to hold above the $75 figure in order to extend the recovery in the near term. The key support is still represented by the mentioned moving average that arrives at $74.40 today. If the futures fall below $74 any time soon, the technical picture would deteriorate further.
