Crude Oil Price Update – Weak as Renewed China COVID Restrictions Offset Surge in Exports

U.S. West Texas Intermediate crude oil futures are trading lower on Thursday, but remained near three-month highs after China imposed new COVID-19 lockdown measures on parts of Shanghai. In other news, a report showed an increase in China’s exports in May.

At 13:21 GMT, August WTI crude oil is at $119.00, down $0.78 or -0.65%. On Wednesday, the United States Oil Fund ETF (USO) settled at $91.98, up $1.94 00 +2.15%.

Demand Jitters Flare Up as Parts of Shanghai Resume Lockdowns

Demand worries resurfaced on Thursday as Shanghai and Beijing went back on fresh COVID-19 alert after parts of China’s largest economic hub imposed new lockdown restrictions and the city announced a round of mass testing for millions of residents.

China’s Exports Surge on Easing COVID Restrictions

China’s exports grew at a double-digit pace in May, shattering expectations in an encouraging sign for the world’s second biggest economy, as factories restarted and logistics snags eased after authorities relaxed some COVID curbs in Shanghai.

Outbound shipments in May jumped 16.9% from a year earlier, the fastest growth since January this year, and more than double analysts’ expectations for an 8.0% rise. Exports were up 3.9% in April.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $120.75 will signal a resumption of the uptrend. A move through $100.66 will change the main trend to down.

The minor trend is also up. A trade through $115.04 will change the minor trend to down. This will shift momentum to the downside.

The nearest support is a pivot at $117.90. This is followed by a pair of 50% levels at $114.85 and $113.35.

Daily Swing Chart Technical Forecast

Trader reaction to $118.93 is likely to determine the direction of the August Crude Oil futures contract on Thursday.

Bullish Scenario

A sustained move over $118.94 will indicate the presence of buyers. This could trigger a surge into the main top at $121.17. Taking out this level will reaffirm the uptrend with $123.18 the next likely target. This is a potential trigger point for an acceleration into the May Contract High at $126.42.

Bearish Scenario

A sustained move under $118.93 will signal the presence of sellers. The first downside target is the pivot at $117.90. If this fails then look for the selling to possibly extend into the support cluster at $115.04 – $114.85.