Crude Oil Price Update – Underpinned by Softer Dollar, Possible OPEC+ Supply Cuts

U.S. West Texas Intermediate crude oil futures are moving higher on Tuesday as traders attempt to claw back some of yesterday’s loss. After plunging to a nine-month low the previous session, prices are rebounding, supported by supply curbs in the U.S. Gulf of Mexico due to rapidly approaching Hurricane Ian.

A slightly softer U.S. Dollar is also helping to create demand for the dollar-denominated asset. Meanwhile, there are reports circulating that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, may take action to stem the drop in prices by cutting supply. The group meets to set policy on October 5.

At 10:45 GMT, November WTI crude oil is trading $77.89, up $1.18 or +1.54%. On Monday, the United States Oil Fund ETF (USO) settled at $63.18, down $2.14 or -3.28%.

In other news, the American Petroleum Institute’s report will be released at 20:30 GMT. It is expected to show a 300,000-barrel increase in crude stocks.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the January 24 main bottom at $75.70 will reaffirm the downtrend. A move through $86.68 will change the main trend to up.

On the downside, the nearest support is a long-term 50% level at $74.26.

Daily Swing Chart Technical Forecast

Trader reaction to $78.28 is likely to determine the direction of the November WTI crude oil market on Tuesday.

Bullish Scenario

A sustained move over $78.28 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into a minor pivot at $81.47. Overcoming this level will indicate the buying is getting stronger with $86.68 the next potential target.

Bearish Scenario

A sustained move under $78.28 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into $75.70, followed by $74.26. The latter is a potential trigger point for an acceleration to the downside with the January 3, 2022 main bottom at $70.00 the next major target.

Side Notes

Hurricane Ian is not expected to hit any oil platforms at this time, but oil companies are evacuating platforms as a precaution.

The key issue is supply at this time. News that could cause supply disruption will be bullish. There is also chatter that the U.S. Dollar is overbought and needs to come down. A steep break in the U.S. Dollar could send crude oil prices sharply higher.