Crude Oil Price Update – Weakens Under $83.67, Strengthens Over $85.49

U.S. West Texas Intermediate crude oil futures are trading steady-to-better on Friday, but still in a position to close out the week with a loss. Driving the selling pressure this week has been fears that a sharp rise in U.S. interest rates will lead to a recession and lower fuel demand.

Rising interest rates are also making the greenback a more attractive currency, which could lead to lower demand for the dollar-denominated commodity by foreign buyers.

At 10:58 GMT, December WTI crude oil is trading $84.46, up $0.56 or +0.67%. On Thursday, the United States Oil Fund ETF (USO) settled at $69.79, down $2.94 or -4.04%.

Not only are traders being rattled by the upcoming rise in U.S. interest rates, but they’re also being shaken by the International Energy Agency’s (IEA) outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China.

With gains likely to be capped and the market vulnerable to further deterioration, some traders are saying that prices could be supported by possible OPEC+ production cuts, which will be under discussion at the group’s October meeting, while Europe faces an energy crisis driven by uncertainty on oil and gas supply from Russian.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $88.83 will signal a resumption of the uptrend. A move through $80.48 will change the main trend to down.

The minor range is $80.48 to $88.83. The market is currently testing its retracement zone at $84.66 to $83.67.

The short-term range is $95.55 to $80.48. Its retracement zone at $88.20 to $89.79 is also resistance. It stopped the buying at $88.83 on Wednesday.

The market is also trading inside a longer-term retracement zone at $85.49 to $79.52.

Daily Swing Chart Technical Forecast

Trader reaction to the minor Fibonacci level at $83.67 is likely to determine the direction of the December WTI crude oil futures contract on Friday.

Bullish Scenario

A sustained move over $83.67 will indicate the presence of buyers. This could lead to early resistance at $84.66 and $85.49.

Overtaking $85.49 will indicate the buying is getting stronger. This could trigger an acceleration into $88.20.

Bearish Scenario

A sustained move under $83.67 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with potential targets a main bottom at $80.48 and a Fibonacci level at $79.52.