Crude Oil Price Update – Struggling as Traders Brace for Steep Weekly Loss

U.S. West Texas Intermediate crude oil futures are inching higher in a lackluster trade on Friday, but the market is still facing a steep weekly loss as worries over weak economic outlooks in China, Europe and the United States weigh on oil demand.

At 10:48 GMT, January WTI crude oil is trading $72.10, up $0.64 or +0.90%. On Thursday, the United States Oil Fund ETF (USO) settled at $62.74, down $0.91 or -1.43%.

Helping to prop prices higher is optimism over China’s easing of COVID-19 restrictions, but at the same time it may take months to have an impact on demand because of surging infections.

Traders initially read the news of a leak at the Keystone pipeline as bullish, but have since shrugged it off. The market also shrugged off a queue of oil tankers being held up by Turkish authorities on their way to the Mediterranean from the Black Sea.

Essentially, traders are looking for a catalyst as the market tests a major support area at $72.31 – $63.73.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $71.12 will signal a resumption of the downtrend. A move through $83.34 will change the main trend to up.

The major support is a long-term retracement zone at $72.31 to $63.73. On the upside, the short-term resistance is a retracement zone at $78.72 to $84.43.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at $72.31 is likely to determine the direction of the January WTI crude oil market on Friday.

Bullish Scenario

A sustained move over $72.31 will indicate the presence of buyers. This could lead to a test of the minor top at $75.44. Taking out this level will change the minor trend to up and could trigger an acceleration into the short-term Fibonacci level at $78.72.

Bearish Scenario

A sustained move under $72.31 will signal the presence of sellers. This could trigger an acceleration to the downside with $63.73 the next major target.

Side Notes

The retracement zone at $72.31 to $63.73 is 50% to 61.8% of the contract range and a value area. So we’re looking for aggressive counter-trend buyers to try to form a support base inside this area for the start of a short-covering rally.