Crude Oil Price Update – Cooler PPI Data, Weaker Dollar Needed to Offset Demand Fears

U.S. West Texas Intermediate crude oil futures are trading flat after recovering from an earlier setback. The market is being supported by a weaker U.S. Dollar and a report that showed China October refinery output edged up for a second straight month.

Today’s steady trade follows a bearish start for the week on Monday as rising COVID-19 cases in China sparked fears of lower fuel consumption from the world’s top crude oil importer and after OPEC cut its 2022 global demand forecast.

At 07:40 GMT, January WTI crude oil is trading $84.92, down $0.24 or -0.28%. On Monday, the United States Oil Fund ETF (USO) settled at $71.91, down $2.47 or -3.32%.

Today’s US Producer Price Index Report Could Move the Dollar

The U.S. is scheduled to release its latest data on producer prices. The headline figure is expected to come in at 0.4%. The Core PPI is estimated to have risen 0.3%.

Stronger than expected data could boost the U.S. Dollar, putting pressure on dollar-denominated crude oil. Weaker PPI data could drive the dollar lower, giving crude oil a possible boost.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $83.90 will signal a resumption of the downtrend. A move through $92.53 will change the main trend to up.

The minor trend is also down. A trade through $89.20 will change the minor trend to up. This will shift momentum to the upside.

On the downside, potential support is $84.43 and $83.75. This is followed by $81.67 and $78.72.

On the upside, the resistance is a retracement zone at $88.14 to $89.17. This zone stopped the buying last Friday at $89.20.

Daily Swing Chart Technical Forecast

Trader reaction to $84.43 is likely to determine the direction of the January WTI crude oil futures contract on Tuesday.

Bullish Scenario

A sustained move over $84.43 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into $88.14 – $89.20.

Bearish Scenario

A sustained move under $84.43 will signal the presence of sellers. This could lead to a test of $83.90, followed by $83.75. The latter is a potential trigger point for an acceleration into $81.67.