Crude Oil Price Update – Strong Rebound on China Growth Hopes

U.S. West Texas Intermediate crude oil futures finished sharply higher on Tuesday on hopes for a strong rebound in China demand. Russian output cuts also provided some support, while gains were likely offset by worries about higher U.S. interest rates dampening consumption and another increase in U.S. supply.

On Tuesday, April WTI crude oil futures settled at $77.05, up $1.37 or +1.81%. The United States Oil Fund ETF (USO) closed at $67.22, up $0.97 or +1.46%.

Expectations of demand recovery in China underpinned gains, with the market awaiting key data the next two days. Economists polled by Reuters expected that factory activity in the world’s second-largest economy grew in February.

Higher Prices Predicted

“China’s economic recovery will drive its demand for commodities higher, with oil positioned to benefit the most,” JPMorgan analysts said in a client note.

Additionally, oil prices are expected to rise above $90 a barrel toward the second half of 2023 as Chinese demand recovers and Russian output falls, a Reuters poll showed on Tuesday. Similarly, JPMorgan’s oil analysts maintained their 2023 average price forecasts on Brent at $90 a barrel.

Daily April WTI Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. A trade through $80.78 will change the main trend to up. A move through $73.80 will reaffirm the downtrend.

The main range is $82.89 to $72.64. Its 50% level at $77.77 is potential resistance. It stopped the rally on Tuesday.

The short-term range is $80.78 to $73.80. The market closed on the weak side of its 50% level at $77.29, making it resistance.

The minor range is $73.80 to $77.83. Its pivot at $75.28 is a potential downside target.

On the upside, the major resistance zone is $79.76 – $81.85.

Daily April WTI Crude Oil Technical Forecast

Trader reaction to $77.29 is likely to determine the direction of the April WTI crude oil market early Wednesday.

Bullish Scenario

A sustained move over $77.29 will indicate the presence of buyers. This could trigger a surge into $77.77. Overtaking this level will put the market in a strong position with the next major target the long-term 50% level at $79.76.

Bearish Scenario

A sustained move under $77.29 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the minor pivot at $75.28.