The rampant rise in inflation has prompted Biden to take further action. As data shows, US inflation is still increasing in both consumer and producer prices and is mainly caused by higher energy prices.
US Inflation and the pressure on politicians
In the last weeks, WTI prices continued the bullish trend by lifting the restrictions in China, and OPEC forecasted that world oil demand would exceed pre-pandemic levels in 2022. Long with reopenings in China and OPEC+ plans and comments, conflicts between Ukraine and Russia still have no sign of reducing. All mentioned factors helped send the US Crude Oil price above $121 once again before sharply falling under $115.
While Crude prices were rising ahead of US markets opening on Tuesday, Oil fell amid reports that President Joe Biden and Saudi Arabia's crown prince, Mohammad Bin Salman, will meet to discuss issues on the energy markets. Ahead of this meeting, market participants are counting on possible increased production of OPEC members to offset the global supply tightness and its effects on inflation and the overall global economy.
At the same time, we should not forget about the US dollar's strength. Today, the US Dollar Index increased by another 0.3% to print a new multi-year record of around 105.60. Later today and tomorrow, we will have the API and EIA weekly reports of US inventory levels; however, it is not expected to see a significant change in the market caused by them, as many other vital factors are moving the prices.
From the technical point of view, it is still in a clear uptrend in the Daily chart. 20 DMA at 114.50 is the first support.
Under R1, we can see the $110 as the second support. If we do not have any specific fundamental game-changer, prices still can continue and hold the higher levels. Tomorrow's Fed meeting also will be necessary with its effect on stock markets. Substantial price fall in the stock markets can also pressure oil prices.