Crude Oil Price Update – Fuel Demand Concerns Offset by Tight Supply Issues

U.S. West Texas Intermediate crude oil futures are trading lower, but rangebound on Thursday, underpinned by tight supply concerns, but capped by worries about high interest rates causing a global recession.

At 16:54 GMT, December WTI crude oil is trading $88.88, down $1.12 or -1.24%. The United States Oil Fund ETF (USO) is at $73.95, down $0.13 or -0.17%.

Tight Supply Worries Offsetting Demand Concerns

Tight supply concerns are being driven by another draw in U.S. stockpiles, OPEC+ output cuts and the upcoming embargo of Russian oil by the European Union.

Worries about a global recession are being fueled by a sharp rise in the U.S. Dollar, which could dampen foreign demand for dollar-denominated oil.

The greenback is being bolstered by a surge in Treasury yields, making the dollar a more attractive investment.

Yields are being driven higher by hawkish commentary from Fed Chairman Jerome Powell who said on Wednesday it was premature to consider pausing rate increases.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $90.36 will reaffirm the uptrend. A trade through $85.30 will change the main trend to down.

The minor range is $85.30 to $90.36. Its pivot at $87.83 is the support that stopped the selling earlier today.

On the upside, the major resistance is a long-term 50% level at $93.28. On the downside, the main support is a price cluster at $85.49 to $85.30.

Daily Swing Chart Technical Forecast

Trader reaction to $88.98 will determine the direction of the December WTI crude oil market into the close on Thursday.

Bullish Scenario

A sustained move over $88.98 will indicate the presence of buyers. If this creates enough upside momentum then look for a test of $90.36.

Taking out $90.36 with conviction could extend the rally into the main top at $92.34.

Bearish Scenario

A sustained move under $88.98 will signal the presence of sellers. This could lead to a quick test of the pivot at $87.83. This is a potential trigger point for an acceleration into the support cluster $85.49 to $85.30.