Oil Stays Elevated Near $100 as Markets Await Fed Signals

Oil is trading near the $100 mark ahead of the Federal Reserve’s latest policy decision, as investors reassess the impact of geopolitical tensions, inflation pressure, and shifting rate expectations.

In Asian trading, U.S. Treasury yields moved lower, with the 2-year yield falling 2.5 basis points to 3.706%, the 10-year yield slipping 2.4 basis points to 4.259%, and the 30-year yield easing 1.8 basis points to 4.889%. While yields softened, markets remain cautious as elevated crude prices continue to cloud the inflation outlook.

The article highlights how oil’s recent rally has changed the interest rate narrative. According to LSEG data, money markets are now pricing in just one rate cut for the year, a sharp reset from earlier expectations for a more accommodative path. The concern is that higher energy prices could flow into the wider economy through transport and production costs, making it harder for central banks to ease policy in the near term.

From a technical perspective, WTI crude oil is trading around $97.41, after a sharp spike that previously sent prices as high as $119.43. The market has since stabilised in the mid-$90s, but the broader structure remains bullish. Short-term moving averages continue to support that view, with the 5-day moving average at 93.12, the 10-day at 87.16, the 20-day at 76.66, and the 30-day at 72.35.

Immediate resistance is seen around $100 to $105, with a break higher potentially reopening a move toward $110, while the $119 peak remains the major upside reference point. On the downside, support is identified around $93 to $95, followed by stronger structural support near $90.

With crude still elevated and volatility high, traders are now focused on whether the Fed will hold rates steady as expected and how policymakers frame the inflation risk from the latest energy shock. 

Read more on how oil, Treasury yields, and Fed expectations are influencing market sentiment in this article.