Crude Oil Price Update – Weak on Renewed Demand Worries, Soaring Inflation

U.S. West Texas Intermediate crude oil futures are trading lower late in the session on Friday as a surge in the U.S. Dollar raised concerns over foreign demand for the dollar denominated asset.

The greenback rose sharply against a basket of major currencies after data showing a steep acceleration in U.S. consumer inflation raised fears of more aggressive rate hikes by the Federal Reserve.

At 18:00 GMT, August WTI crude oil is trading $117.95, down $1.14 or -0.86%. The United States Oil Fund ETF (USO) is at $90.12, down $0.96 or -1.05%.

Gains were also capped after China said it will reimpose COVID-19 lockdowns in eight out of 16 of Shanghai’s districts after the country’s largest economic hub recorded a cluster outbreak of COVID-19. This renewed worries over demand.

In U.S. economic news, the U.S. Labor Department showed consumer prices in the country jumped by more than expected in the month of May, raising concerns about the outlook for interest rates.

The Labor Department said its consumer price index soared by 1% in May after rising by 0.3% in April. Economists had expected consumer prices to increase by 0.7%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $120.75 will signal a resumption of the uptrend. A move through $121.17 will reaffirm the uptrend.

The minor trend is also up. A trade through $115.04 will change the minor trend to down. This will shift momentum to the downside.

The new minor range is $120.75 to $115.84. The market is currently straddling its pivot at $118.33.

On the downside, the nearest support is a pair of pivots at $114.85 and $113.35. These are followed by the short-term retracement zone at $110.71 to $108.33.

Daily Swing Chart Technical Forecast

Trader reaction to $118.33 is likely to determine the direction of the August WTI crude oil market into the close on Friday.

Bearish Scenario

A sustained move under $118.33 will indicate the presence of sellers. If this move creates enough late session momentum then look for the selling to possibly extend into $114.85 – $113.35 into the close. The minor bottom at $115.04 falls inside this zone.

Bullish Scenario

A sustained move over $118.33 will signal the presence of buyers. If this generates enough upside momentum then look for a possible surge into $120.75 – $121.17.