Crude Oil Price Update -Hovering Near One-Week High Ahead of API Inventories Report

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Tuesday, in a volatile session, driven by choppy trading in the U.S. Dollar Index.  Traders have more than recouped yesterday’s steep losses amid speculation that China could soon reopen from strict COVID curbs.

At 18:30 GMT, December WTI crude oil futures are trading $88.37, up $1.84 or +2.13%. The United States Oil Fund ETF (USO) is at $73.29, up $1.76 or +2.46%.

China Could Be Reassessing Reopening Scenarios

Reuters is reporting that an unverified note trending in social media, and tweeted by influential economist Hao Hong, said a “Reopening Committee” has been formed by Politburo Standing Member Wang Huning, and is reviewing overseas COVID data to assess various reopening scenarios, aiming to relax COVID rules in March, 2023.

Although the statement has not been verified, the news is gather momentum, helping to boost prices.

Gains Could Be Capped by Rising Supply

In a further limit to price gains, U.S. crude oil stocks are likely to have risen during the week ending Oct 28, a preliminary Reuters poll showed. However, other polls are calling for a draw of about 200,000 barrels. The poll was conducted ahead of reports from the American Petroleum Institute (API) due at 20:30 GMT.

Last week, the API reported a crude oil build for the week-ending Oct 21 of 4.520 million barrels. U.S. crude inventories have grown by roughly 32 million barrels so far this year, according to API data, while the U.S. Strategic Petroleum Reserves fell by six times that figure, at 192 million barrels.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $89.79 will reaffirm the uptrend. A trade through $81.30 will change the main trend to down.

The minor trend is also up. A trade through $81.30 will change the minor trend to down, shifting the momentum.

The minor range is $89.79 to $85.30. The market is currently trading on the strong side of its pivot at $87.55, making it support. Additional support is a pair of 50% levels at $85.49 and $84.02.

The nearest upside target and major resistance is a long-term 50% level at $93.28.

Daily Swing Chart Technical Forecast

The direction of the December WTI crude oil futures contract into the close on Tuesday will be determined by trader reaction to the minor pivot at $87.55.

Bullish Scenario

A sustained move over $87.55 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the main top at $89.79.

Taking out $89.79 will indicate the buying is getting stronger with the next target a resistance cluster at $92.34 to $93.28.

Bearish Scenario

A sustained move under $87.55 will signal the presence of sellers. This could trigger a late session break into the support cluster at $85.49 to $85.30.