Crude Oil Price Update – Weaker-than-Expected PMI Data Adds to Demand Worries

U.S. West Texas Intermediate crude oil futures are down over 2% on Friday, but remains in a position to post a weekly gain. The market is being influenced mostly by the potential impact of rising interest rates on demand and the global economy. However, supply disruption concerns and hopes for a recovery of demand in China are limiting losses.

At 15:09 GMT, March WTI crude oil futures are trading $74.36, down $1.76 or -2.31%. The United States Oil Fund ETF (USO) is at $64.77, down $1.38 or -2.09%.

In economic news, oil traders were hit with more bearish news from the United States where Flash Manufacturing PMI fell from 47.7 to 46.1 and Flash Services PMI dropped to 44.4 from 46.5. Both figures indicate their respective sectors are in contraction.

The weakening manufacturing PMI data suggests a drop in demand is forthcoming.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $83.14 will change the main trend to up. A move through $70.56 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $77.81 will change the minor trend to up. This will also shift momentum to the downside.

The minor range is $70.56 to $77.81. The market is currently straddling its pivot at $74.19.

The nearest resistance is the short-term retracement zone at $76.85 to $78.33. The nearest support is a long-term 50% level at $70.21.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $74.19 is likely to determine the direction of the March WTI crude oil futures contract on Friday.

Bearish Scenario

A sustained move under $74.19 will indicate the presence of sellers. If this move creates enough downside momentum, the selling could possibly extend into the support cluster at $70.56 to $70.21.

Bullish Scenario

A sustained move over $74.19 will signal the presence of buyers. If this generates enough upside momentum then look for a possible surge into the resistance cluster at $76.85 to $78.33. Inside this cluster is a minor top at $76.85.