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

By:
James Hyerczyk
Updated: Sep 6, 2022, 14:09 GMT+00:00

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

WTI Crude Oil
In this article:

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 October WTI Crude Oil

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.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.

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