Crude Oil Price Update – Sentiment Shifts to Downside Ahead of OPEC+ Decision, Russian Oil Ban

U.S. West Texas Intermediate crude oil futures closed lower on Friday after posting a two-sided trade throughout the session. The price action was fueled by uncertainty ahead of an OPEC+ meeting on Sunday and a European Union ban on Russian crude oil on Monday.

Traders also reacted to the U.S. Non-Farm Payrolls report that came in higher than expected, raising some doubts about the size of the Fed rate hike on December 14. The report helped give the U.S. Dollar an intraday boost that weighed on foreign demand for dollar-denominated crude.

On Friday, January WTI crude oil futures settled at $79.98, down $1.24 or -1.53%. Additionally, the United States Oil Fund ETF (USO) finished at $69.84, down $0.61 or -0.87%.

Traders Monitoring OPEC+ Meeting, EU Ban on Russian Crude

The focus at the start of the week is expected to be on supply. OPEC+ is widely expected to stick to its latest target of reducing oil production by 2 million barrels per day (bpd) when it meets on Sunday, but some analysts are saying that crude oil prices could plunge if the group does not make further cuts.

Meanwhile, Russian oil output could fall by 500,000 to 1 million bpd early in 2023 due to the European Union ban on seaborne imports from Monday, two sources at major Russian producers said.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher.

A trade through $92.53 will change the main trend to up. A move through $73.60 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through $83.34 will reaffirm the minor trend.

On the upside, the nearest resistance is a pair of 50% levels at $83.07 and $84.43. On the downside, the nearest support is a long-term retracement zone at $78.72 to $72.31. This zone stopped the selling at $73.60 on Nov. 28.

Daily Swing Chart Technical Forecast

Trader reaction to $81.50 is likely to determine the direction of the January WTI crude oil market early Monday.

Bullish Scenario

A sustained move over $81.50 will indicate the presence of buyers. This could lead to a labored advance with potential resistance a series of levels at $83.07, $83.34 and $84.43. The latter is a potential trigger point for an acceleration to the upside with no major support coming in until $89.20 – $91.12.

Bearish Scenario

A sustained move under $81.50 will signal the presence of sellers. The first downside target is $78.72, followed by $78.47 and $77.32.

Counter-trend buyers could come in on a test of $78.47-$77.32. But if $77.32 fails then look for a steep break into the main bottom at $73.60.