Crude Oil Price Update – Rally Stalls at $89.43 – $91.37 Retracement Zone on Demand Worries

U.S. West Texas Intermediate crude oil futures are edging lower on Thursday as worries over demand offset supply concerns. Prices are being pressured by expectations of a super-sized interest rate hike by the U.S. Federal Reserve next week that could bring the economy to a halt, driving down demand.

Furthermore, higher interest rates tend to make the U.S. Dollar a more attractive investment. A stronger greenback makes dollar-denominated crude oil less-attractive to foreign buyers, weighing on demand.

At 12:35 GMT, October WTI crude oil is trading $86.78, down $1.70 or -1.92%. On Wednesday, the United States Oil Fund ETF (USO) settled at $72.74, up $0.73 or +1.01%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $90.39 will change the main trend to up. A move through $81.20 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through $85.06 will change the minor trend to down.

On the upside, the nearest resistance is a pivot at 88.26. This is followed by a short-term retracement zone at $89.43 to $91.37.

On the downside, the nearest support is a minor pivot at $85.70.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $88.26 is likely to determine the direction of the October WTI crude oil market on Thursday.

Bearish Scenario

A sustained move under $88.26 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extend into $85.70, followed by $85.06. A trade through this level could trigger an acceleration to the downside with the next major target a support cluster at $81.85 to $81.20.

Bullish Scenario

A sustained move over $88.26 will signal the presence of buyers. The first target is a pivot at $89.43, followed closely by the main top at $90.39.

Taking out $90.39 will change the main trend to up with $91.37 the next target. This is a potential trigger point for an acceleration to the upside.