Crude Oil Price Update – Higher as Traders Bet on China Demand Recovery

U.S. West Texas Intermediate crude oil futures are trading at their highest level since January 3 after China posted weak but better-than-expected annual economic growth data. Hopes that the recent reopening of China’s economy after three-year restrictions were lifted, will boost fuel demand, also pushed prices higher.

At 15:11 GMT, March WTI crude oil is trading $81.06, up $0.95 or +1.19%. The United States Oil Fund ETF (USO) is at $70.77, up $0.72 or +1.03%.

Bullish Traders Betting on China Rebound

China’s gross domestic product expanded 3% in 2022, missing the official target of “around 5.5%” and marking the second-worst performance since 1976. But the data still beat analysts’ forecasts after Beijing’s rolling back of its zero-COVID policy in December.

Other data also released on Tuesday showed China’s daily December oil throughout rose to the second-highest level of 2022 although it dipped annually. Nonetheless, traders are anticipating a boost in demand for transportation fuel when the Lunar New Year begins on Sunday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $81.62 will change the main trend to up. A move through $72.74 will signal a resumption of the downtrend.

The main range is $89.89 to $70.56. The market is currently testing its retracement zone at $80.23 to $82.51. This zone stopped the rally on January 3 at $81.62.

On the downside, the closest support is a pair of 50% levels at $77.18 – $76.09.

Daily Swing Chart Technical Forecast

Trader reaction to the main 50% level at $80.23 is likely to determine the direction of the March WTI crude oil futures contract into the close on Tuesday.

Bullish Scenario

A sustained move over $80.23 will indicate the presence of buyers. Taking out the main top at $81.62 will change the main trend to up. This should trigger a surge into the main Fibonacci level at $82.51, followed by another main top at $83.14.

Bearish Scenario

A sustained move under $80.23 will signal the presence of sellers. If this creates enough downside momentum then look for a potential break into the minor pivot at $77.18.