Oil Prices Surge as Fed Decision Looms – What’s Next?
Oil prices spiked on Monday as WTI crude climbed to $67.39, driven by geopolitical tensions in the Middle East and rising expectations for increased Chinese demand.
Meanwhile, U.S. stock futures slipped, contrasting with gains across Asian markets. Investors are now bracing for a pivotal week of central bank decisions, particularly from the U.S. Federal Reserve, which is widely expected to hold interest rates steady on Wednesday.
Geopolitical Risks & China’s Demand Push Oil Higher
Oil’s rally comes as U.S. Defense Secretary Lloyd Austin confirmed continued strikes on Yemen’s Houthis, in response to attacks on shipping lanes. The fear of supply disruptions sent crude prices soaring in early Asia trading on Monday, with analysts predicting further upside.
Tony Sycamore, an analyst at IG, noted that if crude surpasses $68.50, it could trigger a short-covering rally, further accelerating gains.
Rising demand from China has also supported oil prices. Beijing unveiled new stimulus measures on Sunday, including income boosts and childcare subsidies, aimed at increasing domestic consumption.
China’s financial regulators also pledged to relax credit conditions, enhancing consumer spending capacity.
According to Lynn Song, ING’s Chief Economist for Greater China, these measures are expected to drive mid-single-digit consumption growth in 2025, with further upside contingent on a sustained economic recovery.
Market Awaits Fed Decision & Policy Outlook
The U.S. Federal Reserve’s policy meeting, set to conclude on Wednesday, remains the focal point for investors. While the Fed is expected to leave interest rates unchanged, traders will be closely analyzing Fed Chair Jerome Powell’s statement for insights into the future rate-cut timeline.
A hawkish stance could weigh on oil prices, strengthening the dollar and reducing demand for commodities.
A dovish tone could fuel further upside, as lower interest rates would stimulate economic activity and oil demand.
Beyond the Fed, other central banks, including the Bank of Japan and the Bank of England, are also set to announce their policy decisions this week, adding to market volatility.
WTI Crude Oil Technical Outlook – March 17, 2025
WTI crude remains consolidated within a symmetrical triangle pattern, suggesting an imminent breakout. The 50-period EMA at $67.06 is acting as a key dynamic support, reinforcing the short-term bullish structure.
Key Levels to Watch
Immediate Resistance: $68.06 – A breakout here could push oil toward $69.27 and $70.28.
Immediate Support: $67.05 – A breakdown below this level may expose $66.13 and $65.29 as next downside targets.
Market Sentiment & Conclusion
Oil prices are at a critical inflection point, with a breakout above $68.06 signaling further bullish momentum toward the $70+ range. However, geopolitical risks, Chinese demand recovery, and the Fed’s policy tone will be decisive in shaping crude’s next major move.
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