Crude Oil Price Update – Straddling Major 50% Support at $88.26

U.S. West Texas Intermediate crude oil futures are edging higher on Friday as traders begin squaring positions ahead of the Tuesday’s OPEC+ meeting at which members are expected to discuss production cuts. Gains are expected to be limited, however, due to concerns over rising U.S. interest rates, weak global growth and China’s fresh COVID-19 restrictions.

At 11:04 GMT, October WTI crude oil is trading $88.20, up $1.59 or +1.84%. On Thursday, the United States Oil Fund ETF (USO) settled at $70.97, down $2.14 or -2.93%.

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together know as OPEC+, are due to meet on Sept. 5 against a backdrop of expected declines in demand, though top producer Saudi Arabia says supply remains tight.

OPEC+ this week revised market balances for this year and now sees demand lagging supply by 400,000 barrels per day (bpd), against 900,000 bpd forecast previously. The producer group expects a market deficit of 300,000 bpd in its base case for 2023.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $85.37 will reaffirm the downtrend. A move through $97.66 will change the main trend to up.

Crude oil is currently testing a major support zone at $88.26 to $81.85. This zone is controlling the longer-term direction of the market.

On the upside, the nearest resistance is a pivot at $91.52, followed by a short-term retracement zone at $92.56 to $94.26.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at $88.26 is likely to determine the direction of the October WTI crude oil market on Friday.

Bullish Scenario

A sustained move over $88.26 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the pair of 50% levels at $91.52 to $92.56.

Bearish Scenario

A sustained move under $88.26 will signal the presence of sellers. The first major downside target is the main bottom at $85.37. Taking out this level will reaffirm the downtrend and could trigger an acceleration into the long-term Fibonacci level at $81.85.