Crude Oil Price Update – Favorable US CPI Data Could Trigger WTI Surge into $80.23

U.S. West Texas Intermediate crude oil futures are grinding higher on Thursday amid optimism that that demand for fuel will grow in 2023. The move follows a more than 3% jump on Wednesday. Support is also being provided by concern over the impact of sanctions on Russian crude oil.

Providing a little resistance for buyers is a massive surprise build in U.S. crude stockpiles and caution over whether upcoming inflation data from the United States will point to a slower increase in interest rates.

At 10:03 GMT, March WTI crude oil futures are trading $78.43, up $0.75 or +0.97%. On Wednesday, the United States Oil Fund ETF (USO) settled at $68.08, up $2.18 or +3.31%. Yesterday’s gains marked the fifth straight day of gains for the first time since October.

Crude Oil Traders Bracing for US Consumer Inflation Report

The U.S. consumer price index (CPI) report, due to be released at 13:30 GMT, is set to have a big impact on crude oil by shaping expectations of the speed of interest rate hikes in the United States.

Economists expect the rise in core U.S. consumer prices to slow to an annual pace of 5.7% in December, versus 6% a month earlier. Month-on-month headline inflation is seen at zero.

Lower inflation should drive down Treasury yields and the U.S. Dollar, making dollar-denominated crude oil more attractive to foreign buyers.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $81.62 will change the main trend to up. A move through $72.74 will signal a resumption of the downtrend.

Support is a pair of 50% levels at $77.18 and $76.09, followed by a Fibonacci level at $74.78.

Resistance is the retracement zone at $80.23 to $82.51. This zone stopped the rally at $81.62 on January 3.

Daily Swing Chart Technical Forecast

Trader reaction to $77.18 will determine the direction of the March WTI crude oil market on Thursday.

Bullish Scenario

A sustained move over $77.18 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $80.23 to $82.51.

Bearish Scenario

A sustained move under $77.18 will signal the presence of sellers. This could trigger a labored break with potential targets coming in at $76.09 and $74.78. The latter is a potential trigger point for an acceleration to the downside.