Crude Oil Price Update – Choppy Trade as Investors Turn to Demand Concerns

U.S. West Texas Intermediate crude oil futures are lower on Monday morning, with traders once again expressing concerns about demand due to renewed COVID-19 restrictions in China and expectations of aggressive oil rate hikes. interest in the United States and Europe.

As of 06:08 GMT, October WTI crude oil futures are trading at $85.72, down $1.07 or -1.23%. On Friday, the United States Oil Fund ETF (USO) settled at $71.11, up $3.02 or +4.43%.

Today’s early losses erode some of Friday’s strong gains that were fueled by a nominal supply cut by OPEC and its allies, and Putin’s threat to cut energy supplies.

China’s oil demand could decline for the first time in 20 years

Oil demand in China, the world’s biggest energy consumer, could contract for the first time in two decades this year as Beijing’s zero COVID policy keeps people at home over the upcoming holidays and reduces the fuel consumption, Reuters reported.

A strong dollar should weigh on crude demand

The Federal Reserve and the European Central Bank (ECB) are expected to raise rates aggressively in an effort to bring down stubborn inflation. Both moves could lift the US Dollar.

A Fed rate hike would make the US dollar a more attractive investment, while an aggressive ECB rate hike could lead the Eurozone into recession, which could also encourage investors to move money to the dollar. A stronger greenback could lead to lower foreign demand, as crude oil is a dollar-denominated commodity.

October Daily WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the trend is up, following the confirmation of the September 8 closing price reversal low.

A trade at $81.20 will negate the chart pattern and signal a resumption of the downtrend. A move to $90.39 will change the main uptrend.

The first minor range is $90.39 to $81.20. The market is currently straddling its pivot at $85.80.

On the downside, the closest support is another minor pivot at $84.20, followed by a long-term Fibonacci level at $81.85.

On the upside, the closest resistance is the long-term 50% level at $88.26, followed by a short-term retracement zone of $89.43 at $91.37.

Daily Swing Chart Technical Forecast

Traders’ reaction to the minor pivot at $85.80 should determine the direction of the October WTI Crude Oil market on Monday.

Bullish scenario

A sustained move above $85.80 will indicate the presence of buyers. If this creates enough bullish momentum, look for a possible push towards a pair of 50% levels at $88.26 and $89.43. The latter is the last potential resistance before the main high of $90.39.

Downside scenario

A sustained move below $85.80 will signal the presence of sellers. This could trigger a breakout to $84.20. Aggressive countertrend buyers might come in on the first test of this level, but if it fails, look for a dip to $81.85 followed by the minor low of $81.20.