Crude Oil Price Update – Counter-Trend Buyers Facing Challenge at $85.80

U.S. West Texas Intermediate crude oil futures are edging higher on Friday supported by real and threatened cuts to supply, according to Reuters.

Despite the market’s strong performance the past two sessions, crude oil is still poised to post a second consecutive weekly loss. This week’s losses are being fueled by a bleak demand outlook due to a number of aggressive interest rate hikes and China’s COVID-19 curbs.

At 11:53 GMT, October WTI crude oil is trading $85.01, up $1.47 or +1.76%. On Thursday, the United States Oil Fund ETF (USO) settled at $68.00, up $0.38 or +0.56%.

On the bullish side of the equation, Russian President Vladimir Putin is threatening to halt oil and gas exports to Europe if price caps are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices.

In bearish news that could have an impact on demand, the city of Chengdu is extending a lockdown for most of its more than 21 million residents on Thursday while millions more in other parts of China were told to shun travel during upcoming holidays.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside earlier today with the confirmation of yesterday’s closing price reversal bottom.

A trade through $81.20 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a trade through $90.39.

On the downside, the major support is the long-term Fibonacci level at $81.85. On the upside, the first resistance is a minor pivot at $85.80, followed by the long-term 50% level at $88.26.

Daily Swing Chart Technical Forecast

Trader reaction to $83.23 is likely to determine the direction of the October WTI crude oil market on Friday.

Bullish Scenario

A sustained move over $83.23 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the pivot at $85.80.

Look for sellers on the first test of $85.80. Overcoming it, however, could extend the rally into the major 50% level at $88.26.

Bearish Scenario

A sustained move under $83.23 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to lead to a retest of the major Fibonacci level at $81.85, followed closely by the minor bottom at $81.20.