Crude Oil slides below $70 ahead of vital Fed meeting

• Crude Oil dips lower with nervousness picking up towards the crucial Fed meeting.
• Overnight API data was a surprise build against all expectations. 
• The US Dollar Index remains under pressure, trading at the lower boundary of September's bandwidth. 

Crude Oil drops lower this Wednesday in a very calm market which is looking ahead to the US Federal Reserve (Fed) meeting later this Wednesday. Meanwhile India's government has removed the windfall tax on crude oil Bloomberg reports. Despite expectations for a drawdown on the back of tropical storm Francine whipping out large portions of production in the Gulf, the overnight stockpile number from the American Petroleum Institute was a build of 1.96 million barrels. 

The US Dollar Index (DXY), which measures the performance of the Greenback against a basket of six different currencies, is trading on the downside again. Market expectations are very split over the size of the initial rate cut. The outcome later this Wednesday could be a volatile event. 

At the time of writing, Crude Oil (WTI) trades at $69.14 and Brent Crude at $72.32.

Oil news and market movers: Support is needed for the sector

• Bloomberg reported that India has removed the windfall tax on crude oil effective Wednesday, according to a government notification. This comes after several producers already signalled having financial issues, with on Tuesday two major refiners filing for bankruptcy in China for example. 
• Saipem has been awarded a new offshore contract worth approximately $2 billion for the development of the Marjan field in Saudi Arabia, according to a statement, Reuters reports.
•  Near 14:30 GMT, the Energy Information Administration will release its weekly Crude stockpile report. Expectation is for a drawdown by 0.1 million barrels against the previous build of 0.833 million barrels. 

Oil Technical Analysis: All hopes that the Fed delivers

Crude Oil price will have several traders crossing their fingers in the hope the Fed later this evening will deliver a dovish message. A bigger than expected rate cut and further rate cut projections down the line will be perceived as oxygen for the much battered Crude Oil price. Expect to see Crude Oil rallying in the assumption that demand and growth will pick up again if the Fed delivers that ultra-dovish message without spooking the markets. 

First level to watch on the upside remains $70.00 after it was tested on Tuesday but did not hold. Once there has been a daily close above it, $71.46 gets back on the table as the next level to look out for. Ultimately, a return to $75.27 is still possible, but would likely come after a seismic shift in current balances. 

Support should be very close by at $68.19, which was the triple bottom back in the summer of 2023. The next level further down the line is $64.38, the low from March and May 2023. Should that level face a second test and snap, $61.65 becomes a target, with of course $60.00 as a psychologically big figure just below it, at least tempting to be tested. 

US WTI Crude Oil: Daily Chart