Crude Oil Price Update – Traders Battling Demand Fears after OPEC-Led Rally Fizzles

U.S. West Texas Intermediate crude oil futures are edging higher after nearing a support area at $85.37 to $85.98 earlier in the session. Today’s early rapid retreat suggested that traders were ignoring a largely symbolic OPEC+ production cut of 100,000 barrels per day and instead focusing on slower global demand and higher interest rates.

However, the rebound indicates that traders may be recognizing the mid-80s as value and a support zone. It could also support the notion that OPEC+ is trying to establish a support base with its small cut in output.

At 13:39 GMT, October WTI crude oil futures are trading $87.62, up $0.75 or +0.86%. The United States Oil Fund ETF (USO) is at $72.01, up $0.58 or +0.81%.

While the OPEC+ production cut may be helping to establish a support base, new COVID-19 lockdowns in China have added to worries that high inflation and rate hikes will hit demand, putting a lid on prices.

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.

The market is currently testing the long-term retracement zone at $88.26 to $81.85. This zone has held as support for nearly two-months, suggesting traders are recognizing value inside this area.

On the upside, the nearest resistance is $91.52, followed by a resistance 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 into the close on Tuesday.

Bearish Scenario

A sustained move under $88.26 will indicate the presence of sellers. The first downside target is the minor bottom at $85.98, followed by the main bottom at $85.37. The latter is a potential trigger point for an acceleration into the long-term 61.8% level at $81.85.

Bullish Scenario

A sustained move over $88.26 will signal the presence of buyers. The first upside target is the intraday high at $90.39. Taking out this level could lead to a labored rally with resistance lined up at $91.52, $92.56 and $94.26. This is the last resistance level before the $97.66 main top.