Crude Oil Price Update – Strong Rebound Powered by OPEC+ Output Cut Speculation
U.S. West Texas Intermediate crude oil futures closed higher on Monday after hitting its lowest session in a year earlier in the day. The sudden reversal in prices to the upside was fueled by talk of an OPEC+ production cut that offset concerns about strict COVID-19 curbs in China, the world’s biggest crude importer.
Analysts at Eurasia Group suggested in a note Monday that weakened demand out of China could spur the Organization of the Petroleum Exporting Countries and allies including Russia to cut output after reducing supply in October.
The rumors of a possible cut outweighed an earlier sell-off built on the weak outlook out of China, where hundreds of demonstrators and police clashed on Sunday over strict COVID restrictions that have limited free moment among millions of residents, according to Reuters.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, Monday’s closing price reversal bottom suggests momentum may be getting ready to shift to the upside.
A trade through $73.60 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 $82.36 will change the minor trend to up. This will confirm the shift in momentum to the upside.
The long-term range is $60.23 to $108.63. The market is currently trading inside its retracement zone at $72.31 to $78.72.
The short-term range is $92.53 to $73.60. Its pivot at $83.07 is a potential upside target. On the downside, the major support is $63.73.
Daily Swing Chart Technical Forecast
Trader reaction to $75.72 is likely to determine the direction of the January WTI crude oil market early Tuesday.
A sustained move over $75.72 will indicate the presence of buyers. Taking out Monday’s high at $77.84 will confirm the closing price reversal bottom. This could trigger a surge into $78.72. This level is a potential trigger point for an acceleration to the upside with the next major target $83.07.
A sustained move under $75.72 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into $73.60, followed by $72.31.