Crude Oil Price Update – Trader Reaction to $81.67 Sets the Tone Amid Concerns Over Demand
U.S. West Texas Intermediate crude oil futures are inching higher on Friday as the U.S. Dollar dipped. Nonetheless, the market is still poised to finish lower for the week on concerns about weakening demand in China and further interest rate hikes by the Fed. Higher rates will boost the U.S. Dollar, leading to lower foreign demand for dollar-denominated crude oil.
At 05:52 GMT, January WTI crude oil is trading $82.13, up $0.73 or +0.90%. On Thursday, the United States Oil Fund ETF (USO) settled at $70.17, down $1.87 or -2.60%.
OPEC Cuts Its Demand Forecast
In other news, OPEC on Monday cut its forecast for 2022 global oil demand growth for a fifth time since April and further trimmed next year’s figure, citing mounting economic challenges including high inflation and rising interest rates.
“The world economy has entered a period of significant uncertainty and rising challenges in the fourth quarter of 2022,” OPEC said in a report.
“Downside risks include high inflation, monetary tightening by major central banks, high sovereign debt levels in many regions, tightening labor markets and persisting supply chain constraints.”
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $81.29 will signal a resumption of the downtrend. A move through $80.49 will reaffirm the downtrend.
The main range is $74.96 to $92.53. The market is currently testing the lower level of its retracement zone at $81.67. Additional support is the long-term retracement zone at $78.72 to $72.31.
On the upside, the nearest resistance is a pair of 50% levels at $83.75 and $84.43.
Daily Swing Chart Technical Forecast
Trader reaction to $81.67 is likely to determine the direction of January WTI crude oil on Friday.
Bullish Scenario
A sustained move over $81.67 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into $83.75 – $84.43.
Bearish Scenario
A sustained move under $81.67 will signal the presence of sellers. Taking out yesterday’s low at $81.29 will indicate the selling pressure is getting stronger. This could extend the selling into the main bottom at $80.49. A trade through this level will reaffirm the downtrend with $78.72 the next major target.
