Oil Price Fundamental Daily Forecast – Lower Demand Worries Outweighing OPEC+ Supply Cuts

U.S. West Texas Intermediate and international-benchmark Brent crude oil prices are edging lower on Friday after giving back earlier gains. A rebound in the U.S. Dollar is the early catalyst driving the price action.

Bullish traders are hoping to resume Thursday’s rally that was fueled by worries about low U.S. diesel stocks after a government report showed a larger-than-expected drop in weekly inventories.

Nonetheless, the markets are still trading lower for the week with the threat of a global recession and lower demand putting considerable pressure on prices.

At 13:02 GMT, December WTI crude oil futures are trading $86.49, down $1.46 or -1.66% and December Brent crude oil is at $93.28, down $1.29 or -1.36%. On Thursday, the United States Oil Fund ETF (USO) settled at $72.54, up $1.61 or +2.27%.

The price action is expected to remain volatile over the near-term with bullish traders garnering support from the OPEC+ decision to cut oil production by 2 million barrels per day and the bears worried about lower demand due to global recessionary fears.

Steep Drawdown in US Distillate Stocks Fueled Thursday’s Rapid Turnaround

U.S. crude stocks rose by nearly 10 million barrels last week after another big release from government reserves, while distillate inventories fell sharply, the Energy Information Administration (EIA) said on Thursday.

The sharp drop in distillate stockpiles spurred traders to shrug-off the steep rise in crude oil, driving prices higher for the session. Distillate inventories fell by 4.9 million barrels to 106.1 million barrels, their lowest since May, versus expectations for a 2 million-barrel drop.

Short-Term Outlook

After oscillating between strong and weak earlier in the session on Friday, it looks as if sellers have taken control and are likely to pressure prices into the close. This puts the markets in a position to close more than 4% lower after two weeks of gains on concern over the global economy.

Significant bearish events are forcing downward corrections of oil demand forecasts into the end of the year and next year. Although these events are weighing on prices, the recently announced OPEC+ production cuts are helping to generate some support. This begs the question, “Will OPEC and its allies be willing to make further adjustments to output to stabilize prices?”

The bearish factors exerting the most downward pressure on prices at this time include: China’s zero-COVID policy that is weighing heavily on economic activity and thus oil demand, the International Energy Agency’s (IEA) cut to its oil demand forecast for this and next year and its warning of a potential global recession, and red-hot U.S. core inflation that continues to reinforce views that interest rates would stay higher for longer with the risk of a global recession.

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

Crude Oil Price Update – Momentum Shifts Lower on Recession Fears, Renewed China COVID Worries

U.S. West Texas Intermediate crude oil futures are trading sharply lower on Tuesday as global recession fears escalated following reports of a flare-up in COVID-19 cases in China.

Recession talk moved to the forefront on Monday after World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned of a growing risk of global recession and said inflation remains a continuing problem.

There’s a risk and real danger of a world recession next year,” Malpass said in a dialogue with Georgieva at the start of the first in-person meetings of the two institutions since the COVID-19 pandemic.

At 12:00 GMT, December WTI crude oil futures are trading $88.63, down $1.21 or -1.35%. On Monday, the United States Oil Fund ETF (USO) settled at $73.75, down $1.35 or -1.80%.

In other demand related news, Shanghai and other big Chinese cities, including Shenzhen, have ramped up testing for COVID-19 as infections rise, with some local authorities hastily closing schools, entertainment venues and tourist spots.

Crude oil sellers are also responding to the strengthening U.S. Dollar, which hit multi-year highs on worries about increases to interest rates and escalation of the Ukraine war. A strong greenback tends to weigh on foreign demand for dollar-denominated crude oil.

Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of Monday’s potentially bearish closing price reversal top.

A trade through $92.34 will negate the chart pattern and signal a resumption of the uptrend. A move through $75.70 will change the main trend to down.

The main range is $110.78 to $75.70. Its retracement zone at $93.24 to $97.38 is resistance. This area played a role in stopping yesterday’s rally at $92.34.

On the downside, the nearest support is a long-term 50% level at $85.49, followed by a short-term retracement zone at $84.02 to $82.06.

Daily Swing Chart Technical Forecast

Trader reaction to a minor pivot at $89.81 is likely to determine the direction of the December WTI crude oil market on Tuesday.

Bearish Scenario

A sustained move under $89.81 will indicate the presence of sellers. Taking out the intraday low at $87.28 will indicate the selling pressure is getting stronger. This could create the momentum needed to challenge the long-term 50% level at $85.49.

Bullish Scenario

A sustained move over $89.81 will signal the presence of buyers. A move through the intraday high at $90.15 will indicate the buying is getting stronger. If this generates enough upside momentum then look for a surge into $92.34 to $93.24.

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

Crude Oil Price Update – Underpinned by Softer Dollar, Possible OPEC+ Supply Cuts

U.S. West Texas Intermediate crude oil futures are moving higher on Tuesday as traders attempt to claw back some of yesterday’s loss. After plunging to a nine-month low the previous session, prices are rebounding, supported by supply curbs in the U.S. Gulf of Mexico due to rapidly approaching Hurricane Ian.

A slightly softer U.S. Dollar is also helping to create demand for the dollar-denominated asset. Meanwhile, there are reports circulating that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, may take action to stem the drop in prices by cutting supply. The group meets to set policy on October 5.

At 10:45 GMT, November WTI crude oil is trading $77.89, up $1.18 or +1.54%. On Monday, the United States Oil Fund ETF (USO) settled at $63.18, down $2.14 or -3.28%.

In other news, the American Petroleum Institute’s report will be released at 20:30 GMT. It is expected to show a 300,000-barrel increase in crude stocks.

Daily November WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the January 24 main bottom at $75.70 will reaffirm the downtrend. A move through $86.68 will change the main trend to up.

On the downside, the nearest support is a long-term 50% level at $74.26.

Daily Swing Chart Technical Forecast

Trader reaction to $78.28 is likely to determine the direction of the November WTI crude oil market on Tuesday.

Bullish Scenario

A sustained move over $78.28 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into a minor pivot at $81.47. Overcoming this level will indicate the buying is getting stronger with $86.68 the next potential target.

Bearish Scenario

A sustained move under $78.28 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into $75.70, followed by $74.26. The latter is a potential trigger point for an acceleration to the downside with the January 3, 2022 main bottom at $70.00 the next major target.

Side Notes

Hurricane Ian is not expected to hit any oil platforms at this time, but oil companies are evacuating platforms as a precaution.

The key issue is supply at this time. News that could cause supply disruption will be bullish. There is also chatter that the U.S. Dollar is overbought and needs to come down. A steep break in the U.S. Dollar could send crude oil prices sharply higher.

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

Oil Price Fundamental Daily Forecast – Crushed by Strong Dollar, Recession Concerns

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply lower late in the session on Friday. The more than 5% loss has driven the markets into their lowest levels in eight months as fears that rising interest rates will tip the global economy into a recession outweighed supply concerns fueled by geopolitical risks.

Additionally, the stronger U.S. Dollar also weighed on demand for the dollar-denominated assets as the greenback touched its highest level in more than 20 years.

At 16:30 GMT, November WTI crude oil futures are trading $79.06, down $4.43 or -5.31% and the December Brent crude oil futures contract is at $85.39, down $4.14 or -4.62%. The United States Oil Fund ETF (USO) is trading $65.32, down $3.65 or -5.29%.

WTI and Brent are also down 8% and 6% for the week, respectively, putting them both in a position to post their fourth straight weekly loss. Technicians also noted that WTI is poised to close at its lowest settlement since January 5 and Brent at its lowest level since January 13.

Products are also losing ground with U.S. gasoline and diesel futures off by more than 5%.

Rate Hike Fever Fueling Recession Risks

The U.S. Federal Reserve raised its benchmark interest rate by a super-sized 75 basis points on Wednesday. Joining the Fed in lifting rates was a group of central banks from around the world including the Swiss National Bank and the Bank of England.

The slew of interest rate hikes this week and the promise of more to follow is raising the threat of a global recession and that means lower demand, and an ultimate drop in prices.

While widespread monetary tightening is being blamed as the primarily factor driving down prices, the U.S. Dollar shares some of the blame. The greenback is on track to finish at its highest level against a basket of major currencies since May 2002. Crude oil is being pressured because a strong dollar reduces demand for dollar-denominated oil by making it more expensive for foreign buyers.

Euro Zone Recession Looms

The Euro Zone’s downturn in business activity deepened in September, a survey showed, suggesting a recession looms as consumers rein in spending and as governments urge energy conservation following Russia’s moves to cut off European supply.

Manufacturers were particularly hard hit by high energy costs after Russia’s invasion of Ukraine sent gas prices rocketing, while the bloc’s dominant services industry suffered as consumers stayed at home to save money.

“The third decline in a row for the Euro Zone PMI indicates business activity has been contracting throughout the quarter. This confirms our views a recession could have already started,” said Bert Colijn at ING.

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

Oil Price Fundamental Daily Forecast – Underpinned by Rebounding China Demand, Supply Disruption Threat

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Thursday. Reuters is attributing the move to the prospect of higher Chinese demand and geopolitical risks fueled by a possible escalation of the war in Ukraine.

At 09:52 GMT, November WTI crude oil is trading $83.48, up $0.54 or +0.65% and the December Brent crude oil market is at $89.36, up $0.56 or +0.63%. On Thursday, the United States Oil Fund ETF (USO) settled at $68.72, down $0.50 or -0.72%.

BOJ Intervention Fuels Temporary Short-Covering Rally

My work suggests a sudden reversal in the U.S. Dollar after the Bank of Japan intervened to drive the Yen higher and the dollar lower, may have had something to do with the move. After all, a weaker greenback tends to drive foreign demand for dollar-denominated crude oil.

However, so far all we’re seeing is a mild reaction to the intervention. Furthermore, there is nothing that suggests the event will have a long-term influence on the direction of the Dollar/Yen. The fundamentals didn’t change. The extreme divergence between Federal Reserve monetary policy and Bank of Japan monetary policy remains intact.

With nearly zero chance to reverse the long-term trend in the Dollar/Yen, the BOJ may have been trying to remind the market that they are watching. Nonetheless, there is nothing to suggest the U.S. Dollar is headed lower, which means a rising dollar should continue to weigh on foreign demand for crude oil.

China Crude Demand is Rebounding after Lifting of Strict COVID-19 Restrictions

At least three Chinese state oil refineries and a privately run mega refiner are considering increasing runs by up to 10% in October from September, eyeing stronger demand and a possible surge in fourth-quarter fuel exports, people with knowledge of the matter said, Reuters reported.

Chinese refiners are expecting Beijing to release up to 15 million tonnes worth of oil products export quotas for the rest of the year to support the no. 2 economy’s sagging exports. Such a move would signal a reversal in China’s oil products export policy, add to global supplies and depress fuel prices, according to Reuters.

Traders Eyeing Possible Supply Disruptions as Russia Begins Massive War Call-Up

Oil prices are being underpinned on Thursday after Russia pushed ahead on Thursday with its biggest military mobilization since World War Two.

President Vladimir Putin’s order to mobilize another 300,000 Russians to fight escalates a war that has already killed thousands, displaced millions, pulverized cities, damaged the global economy and revived Cold War confrontation.

Putin’s move has driven some weak shorts out of crude oil, while drawing the attention of just enough bullish speculators to provide support.

There hasn’t been a rally per se because so far the event hasn’t led to a supply disruption. Bullish traders are betting global leaders will get together to form some kind of agreement that will once again limit the amount of Russian oil hitting the open market.

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

Oil Price Fundamental Daily Forecast – Supported by Supply Concerns Ahead of Fed Rate Hike Announcement

U.S. West Texas Intermediate and international-crude oil futures are edging higher on Wednesday after spiking nearly 3% higher on supply disruption concerns after Russian President Vladimir Putin announced a partial military mobilization, escalating the war in Ukraine.

Putin said he had signed a decree on partial mobilization beginning on Wednesday, saying he was defending Russian territories and that the West wanted to destroy the country, Reuters reported.

At 12:38 GMT, November WTI crude oil futures are trading $85.13, up $1.19 or +1.42% and December Brent crude oil is at $90.90, up $1.50 or +1.68%. On Tuesday, the United States Oil Fund ETF (USO) settled at $69.24, down $0.81 or -1.16%.

Keep in mind that no oil supply was lost following Putin’s proclamation so the spike to the upside was likely fueled by short-covering. Traders will take a more definitive position in the market once they see the West’s response to the move.

Traders Bracing for Federal Reserve Rate Hike

After the initial response to Putin, the markets have settled into a range as traders await the Federal Reserve’s highly anticipated 75 basis point rate hike. The recent price action suggests traders are pricing in an economic slowdown and lower demand in anticipation of rate hikes from several major central banks in their effort to drive down every asset subject to inflation.

With the market anticipating a three-quarters of a point rate hike, the surprise move by the Fed will be a 100 basis point rate hike. Traders are pricing in a 19% chance of this occurring. If the Fed does go big, expect a sharp break to the downside.

Furthermore, it’s not just the super-sized rate hike that will trigger a response by crude oil traders, the Fed projections could also move the market substantially. The Fed projections will offer a chance for investors to peak into the future since they will show how high the central bank will raise interest rates and how much officials expect their actions could affect the economy.

Additionally, Fed Chair Jerome Powell speaks at 18:30 GMT, and he is expected to emphasize the central bank will do what it takes to fight inflation and it is unlikely to reverse its rate hikes anytime soon.

API Reports Crude Oil, Product Inventory Builds Ahead of Weekly EIA Report

The American Petroleum Institute (API) reported a build this week for crude oil of 1.035 million barrels, while analysts predicted a bigger build of 2.321 million barrels.

The API also reported a build in gasoline inventories this week of 3.225 million barrels for the week ending September 16, compared to the previous week’s 3.23 million-barrel draw.

Distillate stocks saw a build of 1.538 million barrels for the week, on top of last week’s 1.75-million-barrel increase.

Today’s weekly EIA inventories report, due to be released at 14:30 GMT, is expected to show a 2.0 million build in crude oil inventories.

Short-Term Outlook

Putin’s aggressive move may have escalated the war, attracting the attention of crude oil speculators, but don’t expect much of a bullish reaction until traders can determine its effect on supply.

Additionally, once again I want to emphasize that a full-percentage point rate hike by the Fed could lead to heavy selling pressure. The reaction to a 75 basis point rate hike could be subdued.

Keep in mind that we could also see three volatile reactions today. The first to the rate hike, the second to Fed’s projections and the third to remarks from Fed Chair Powell.

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

Crude Oil Price Update – Weakens Under $84.23, Strengthens Over $85.68

U.S. West Texas Intermediate crude oil futures are edging lower late in the session on Tuesday ahead of today’s American Petroleum Institute’s (API) and tomorrow’s U.S. Energy Information Administration’s (EIA) weekly inventories reports.

Both are expected to show that U.S. crude oil stocks rose by about 2 million barrels during the week-ending September 16, according to a Reuters poll.

At 18:10 GMT, November WTI crude oil futures are trading $84.28, down $1.08 or -1.27%. The United States Oil Fund ETF (USO) is at $69.24, down $0.81 or-1.16%.

WTI crude oil futures were pressured throughout the session as demand for higher risk assets fell and the U.S. Dollar rose amid expectations of an aggressive interest-rate hike by the Federal Reserve on Wednesday.

Higher rates have bolstered the dollar, which remained near a two-decade high against a basket of major currencies on Tuesday, making dollar-denominated oil more expensive for foreign traders.

Daily November WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $80.89 will reaffirm the downtrend. A move through $89.63 will change the main trend to up.

The main range is $96.82 to $80.89. Its retracement zone at $88.86 is resistance. It stopped the rally at $89.63 on September 14.

The first minor range is $80.89 to $89.63. The market is currently straddling its retracement zone at $85.26 to $84.23. A second minor pivot is resistance at $85.68.

Short-Term Outlook

Trader reaction to the retracement zone at $85.68 to $84.23 is likely to determine the short-term direction of the November WTI crude oil market. Buyers are trying to create a potentially bullish secondary higher bottom. Sellers are looking to signal a resumption of the downtrend.

Bearish Scenario

A sustained move under $84.23 will signal the presence of sellers. If this creates enough downside momentum then look for a test of the minor bottom at $81.73. If this level fails then look for the selling to possibly extend into the main bottom at $80.89.

Taking out $80.89 will reaffirm the downtrend and could trigger the start of an acceleration to the downside.

Bullish Scenario

A sustained move over $85.68 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to possibly lead to a retest of the 50% level at $88.86, followed by the main top at $89.63 and the Fibonacci level at $90.73.

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

Oil Price Fundamental Daily Forecast – Strong Selling Tied to Central Bank Rate Hike Fears

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower after giving up earlier gains as the markets continue to bounce inside its two-week range.

Crude oil strengthened earlier in the session amid reports showing OPEC and its allies produced less than their quotas. However, gains were erased on fears that a series of aggressive rate hikes by a number of central banks would push the global economy into recession, curbing fuel demand.

At 13:41 GMT, November WTI crude oil is trading $83.95, down $1.41 or -1.65%. This is down from an intraday high of $86.12. The December Brent crude oil futures contract is at $89.54, down $1.12 or -1.24%. Earlier in the session, it reached a high of $91.54. The United States Oil Fund ETF (USO) is trading $69.26, down $0.79 or -1.13%.

OPEC+ Production Miss Highlights Tight Supply Situation

OPEC+ fell short of its oil production target by 3.583 million barrels per day (bpd) in August, and internal document showed, having missed its target by 2.892 bpd in July, Reuters reported. Prices jumped on the news since it represents a sign of underlying tight supply.

In related news, the impasse over a revival of the Iran nuclear deal is also continuing to keep that country’s exports from fully returning to the market. Look for crude oil prices to retreat if the deal goes through.

When crude oil was trading near the $110 level, the Biden Administration was eager to get this deal completed. Now that oil prices have fallen more than $30 from their highs of the year, the U.S. government doesn’t seem as interested in the deal.

Rate Hikes Weighing on Prices

I don’t think it’s a coincidence that oil prices topped out in March just as the Fed started to raise interest rates. The steep decline in prices is also tightly correlated with the pace of subsequent rate hikes. Therefore, it comes as no surprise that prices are near their lows of the year as the Fed gets ready for another supersized rate hike of 75 basis points on Wednesday. Some traders are also bracing for the possibility of a 100 basis point rate hike.

Even though the market is pricing in a 75 basis point hike, the reaction is still likely to be to the downside. A 100 basis point rate hike could drive crude oil prices into new lows for the year.

One reason crude could drop sharply following another big rate hike is the move could drive the U.S. Dollar to a new more than two decade high. This would weigh on demand for dollar-denominated crude oil. Another reason we’re expecting the initial reaction to the rate hike to be bearish for crude oil is the fear of a global recession.

With a multitude of central banks aggressively raising rates, it seems inevitable that the world’s appetite for crude oil and fuel would eventually slow.

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

Oil Price Fundamental Daily Forecast – Recession Fears Challenging Supply Disruption Concerns

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower as rising interest rates and a strong U.S. Dollar weigh on demand for the dollar-denominated commodities.

Furthermore, worries about a global recession are also pressuring prices, offsetting recent comments from OPEC and the IEA suggesting fresh demand was on the horizon. Meanwhile, helping to limit losses are concerns about future supply disruptions due to the European Union’s anticipated embargo on Russian oil in December.

At 07:58 GMT, November WTI crude oil is trading $83.84, down $0.92 or -1.09% and December Brent crude oil is at $89.43, down $0.62 or -0.69%. On Friday, the United States Oil Fund ETF (USO) settled at $69.90, up $0.14 or +0.20%.

Firm Dollar Weighs on Demand

The dollar firmed as investors braced for a packed week of central bank meetings that are certain to see borrowing costs rise across the globe, with some risk of a super-sized hike in the United States.

Markets are fully-priced for a 75 basis point rate hike by the Swiss National Bank (SNB), but are on the fence over whether the Bank of England (BoE) makes a move toward 50 or 75 basis points. In the United States, traders are already fully-priced for a rise in interest rates of 75 basis points from the Federal Reserve, with futures showing a 20% chance of a full percentage point.

Recession Fears Rising

Tightening monetary policy is expected to slow economic growth, while several financial market indicators suggest that traders expect to see recessions around the world, which could slow global oil demand growth.

Traders are clearly focused on the negatives which is making it difficult for crude oil to sustain a rally. The inability to extend a rally beyond a few days is mostly the result of fears on an economic slowdown in China, a recession in Europe’s major economies, and a slowdown or recession in the United States.

The timing of a recession is always difficult, but crude oil traders seem to be willing to sell now, define a recession later. The consensus says Europe is just a month or two away from a major recession. China would quickly follow. But in the U.S., a recession may be delayed for up to six months because of the resiliency of the labor market.

Short-Term Outlook

Recession fears create uncertainty, and when there is uncertainty, traders liquidate or short the market, hoping for more favorable buying opportunities.

At the same time, optimism can slow down the selling pressure, which is what I think we’re seeing now because prices have gone down, but haven’t collapsed.

The optimism is being fueled by closely watched major forecasters from OPEC, the EIA and the International Energy Agency (IEA). They continue to expect growth in global oil demand both this year and next, with demand outpacing pre-COVID levels in 2023.

It’s this developing balance between the pessimists and the optimists that is creating the rangebound environment.

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

Crude Oil Price Update – Early Strength Over $85.26, Weakness Under $84.23

U.S. West Texas Intermediate crude oil futures inched higher on Friday after recovering from an earlier setback. The catalyst behind the late session short-covering rally was concern over a supply disruption after a report of a spill at Iraq’s Basra terminal.

Despite the minimal gain, the market still closed lower for the week on fears that aggressive rate hikes by the major central banks will curtail global economic growth and demand for fuel.

On Friday, November WTI crude oil settled at $84.76, up $0.11 or +0.13%. This was up from an intraday low of $83.86. The United States Oil Fund ETF (USO) finished at $69.90, up $0.14 or +0.20%.

According to Reuters, oil exports from Iraq’s Basra terminal are being gradually resumed after they were halted last night due to a spillage, which has been contained, Basra Oil Company said.

The spill at the port, which has four loading platforms and can export up to 1.8 million barrels per day, drove up prices on the prospect of lower global crude supply.

Daily November WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $89.63 will change the main trend to up. A move through $80.89 will signal a resumption of the downtrend.

The short-term range is $80.89 to $89.63. The market settled inside its retracement zone at $85.26 to $84.23.

The minor range is $89.63 to $83.86. Its pivot at $86.75 is the nearest resistance.

The main range is $96.82 to $80.89. Its retracement zone at $88.86 to $90.73 is resistance. This zone stopped the rally at $89.63 on September 14.

Short-Term Outlook

Trader reaction to the short-term Fibonacci level at $84.23 is likely to determine the direction of the November WTI crude oil futures market early Monday.

Bullish Scenario

A sustained move over $84.23 will indicate the presence of buyers. Overtaking the short-term 50% level at $85.26 will indicate the buying is getting stronger. If this move creates enough upside momentum, then look for a surge into the pivot at $86.75.

Bearish Scenario

A sustained move under $84.23 will signal the presence of sellers. This could trigger the start of an acceleration to the downside with the main bottom at $80.89 the next target.

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

Oil Price Fundamental Daily Forecast – Conflicting Supply/Demand Outlooks Creating Uncertainty

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures inched higher on Friday after a steep intraday sell-off early in the session pressured prices most of the day. Friday’s modest gain helped soften the impact of a nearly 2% loss for the week.

The choppy price action was fueled by relatively light volume and the lack of conviction from traders. And who could blame the major hedge fund from having the clarity and conviction to take a major position with the supply/demand narrative seemingly changes every day?

On Friday, November WTI crude oil futures settled at $84.76, up $0.11 or +0.13% and December Brent crude oil futures finished at $90.05, up $0.44 or +0.49%. The United States Oil Fund ETF (USO) closed at $69.90, up $0.14 or +0.20%.

Earlier in the week, prices were supported by reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), which predicted global oil demand growing by between 2% and 3% this year and next.

Late in the week, however, the World Bank issued a stern warning about the state of the global economy saying, “The world may be edging toward a global recession in 2023.”

With inflation raging in countries around the world, from the U.S. to Australia, the World Bank is warning that in an attempt to rein in skyrocketing prices, central banks could cause some serious pain for consumers. If consumers start to feel pain then look for demand for fuel to fall along with crude oil prices.

OPEC, IEA: Insignificant Recession Impact on Oil Demand

Despite worries about economic slowdowns from the U.S. to China, neither OPEC nor the IEA expects the post-pandemic rebound in oil consumption to be significantly married by a possible recession.

“We are still optimistic,” OPEC’s new Secretary General Haitham Al Ghais told Reuters las month. “In 2023, there will be a slowdown in growth but it will not be something that we currently anticipate to be lower than historical norms.”

Generally bullish, the group of 13 oil exporting nations predicts an increase in demand of 3.1 million bpd this year and 2.7 million next year, according to a special report from Reuters.

The IEA – which acknowledged this week that demand growth would stall in the final three months of this year – still expects a 2 million bpd rise in oil consumption overall in 2022, to be followed by 2.1 million in 2023, Reuters reported.

World Bank Issues Recession Warning Which Should Weigh on Global Demand

World Bank researchers warned that decreased post-pandemic government spending, combined with rising rates worldwide, could lead to significant financial stress or even “trigger a global recession.”

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession”, the World Bank added.

Short-Term Outlook

The crude oil market is conflicted between planning for increased demand or a recession. This is causing uncertainty, and when there is uncertainty, investors tend to sell or take to the sidelines until they can trade with clarity and conviction.

One problem for traders is the timing of a recession, mostly due to the lag in the release of economic data. In other words, they don’t know whether to plan for recession or wait until the economic data confirms a recession.

Meanwhile, if rising central bank interest rates are the problem, what will happen to the recession outlook if global policymakers collectively begin to slow the pace and size of interest rate hikes?

Most central bankers know pain will be inflicted on consumers from the rate hikes. Federal Reserve Chief Jerome Powell mentioned that specifically in his speech at Jackson Hole, Wyoming at the end of August. However, there is still the possibility of a short-lived recession or a “soft-landing” if central bank officials enact their exit strategies in a timely manner.

OPEC+ to the Rescue?

Additionally, some crude oil bulls are also counting on OPEC+ to trim output should demand fall significantly. Furthermore, the U.S. is expected to stop releasing oil from its Strategic Petroleum Reserve (SPR) in October. This should alleviate some of the supply pressures.

We’re looking for a mostly rangebound trade over the near-term. Although the market will have a hard time sustaining a meaningful rally due to lingering recession fears, this situation could be taken care of quickly with a well-timed supply disruption. Meaning:  Keep your eyes on OPEC’s October meeting.

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

Crude Oil Price Update – Weakens Under $83.67, Strengthens Over $85.49

U.S. West Texas Intermediate crude oil futures are trading steady-to-better on Friday, but still in a position to close out the week with a loss. Driving the selling pressure this week has been fears that a sharp rise in U.S. interest rates will lead to a recession and lower fuel demand.

Rising interest rates are also making the greenback a more attractive currency, which could lead to lower demand for the dollar-denominated commodity by foreign buyers.

At 10:58 GMT, December WTI crude oil is trading $84.46, up $0.56 or +0.67%. On Thursday, the United States Oil Fund ETF (USO) settled at $69.79, down $2.94 or -4.04%.

Not only are traders being rattled by the upcoming rise in U.S. interest rates, but they’re also being shaken by the International Energy Agency’s (IEA) outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China.

With gains likely to be capped and the market vulnerable to further deterioration, some traders are saying that prices could be supported by possible OPEC+ production cuts, which will be under discussion at the group’s October meeting, while Europe faces an energy crisis driven by uncertainty on oil and gas supply from Russian.

Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $88.83 will signal a resumption of the uptrend. A move through $80.48 will change the main trend to down.

The minor range is $80.48 to $88.83. The market is currently testing its retracement zone at $84.66 to $83.67.

The short-term range is $95.55 to $80.48. Its retracement zone at $88.20 to $89.79 is also resistance. It stopped the buying at $88.83 on Wednesday.

The market is also trading inside a longer-term retracement zone at $85.49 to $79.52.

Daily Swing Chart Technical Forecast

Trader reaction to the minor Fibonacci level at $83.67 is likely to determine the direction of the December WTI crude oil futures contract on Friday.

Bullish Scenario

A sustained move over $83.67 will indicate the presence of buyers. This could lead to early resistance at $84.66 and $85.49.

Overtaking $85.49 will indicate the buying is getting stronger. This could trigger an acceleration into $88.20.

Bearish Scenario

A sustained move under $83.67 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with potential targets a main bottom at $80.48 and a Fibonacci level at $79.52.

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

Crude Oil Price Update – Rally Stalls at $89.43 – $91.37 Retracement Zone on Demand Worries

U.S. West Texas Intermediate crude oil futures are edging lower on Thursday as worries over demand offset supply concerns. Prices are being pressured by expectations of a super-sized interest rate hike by the U.S. Federal Reserve next week that could bring the economy to a halt, driving down demand.

Furthermore, higher interest rates tend to make the U.S. Dollar a more attractive investment. A stronger greenback makes dollar-denominated crude oil less-attractive to foreign buyers, weighing on demand.

At 12:35 GMT, October WTI crude oil is trading $86.78, down $1.70 or -1.92%. On Wednesday, the United States Oil Fund ETF (USO) settled at $72.74, up $0.73 or +1.01%.

Daily October WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $90.39 will change the main trend to up. A move through $81.20 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through $85.06 will change the minor trend to down.

On the upside, the nearest resistance is a pivot at 88.26. This is followed by a short-term retracement zone at $89.43 to $91.37.

On the downside, the nearest support is a minor pivot at $85.70.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $88.26 is likely to determine the direction of the October WTI crude oil market on Thursday.

Bearish Scenario

A sustained move under $88.26 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extend into $85.70, followed by $85.06. A trade through this level could trigger an acceleration to the downside with the next major target a support cluster at $81.85 to $81.20.

Bullish Scenario

A sustained move over $88.26 will signal the presence of buyers. The first target is a pivot at $89.43, followed closely by the main top at $90.39.

Taking out $90.39 will change the main trend to up with $91.37 the next target. This is a potential trigger point for an acceleration to the upside.

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

Oil Price Fundamental Daily Forecast – Drifting Lower as Buyers Struggle with Economic Uncertainty

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Thursday as traders weighed a large U.S. crude oil stockpile build and stronger U.S. Dollar against a potential strike-driven supply disruption.

At 08:22 GMT, October WTI crude oil is trading $87.76, down $0.72 or -0.81% and December Brent crude oil is at $92.36, down $0.76 or -0.82%. On Wednesday, the United States Oil Fund ETF (USO) settled at $72.74, up $0.73 or +1.01%.

Bearish Factor:  US Crude Stockpiles Rise for Second Straight Week

U.S. crude stocks and distillate inventories rose more than expected in the most recent week, while fuel demand remained below last year’s levels, the Energy Information Administration said on Wednesday.

The gains were boosted by an 8.4-million-barrel release from the U.S. Strategic Petroleum Reserve (SPR) into commercial stocks; those releases are set to end in October, and supply is expected to tighten at that time.

Bearish Factor:  Distillate Stockpiles Rise, Product Supplied Drops

Refinery crude runs rose by 93,000 barrels per day, boosting refinery utilization rates by 0.6 percentage points to 91.5%. The increase helped distillate stockpiles, which include diesel and heating oil, to build by 4.2 million barrels to 116 million barrels. Distillate stocks have been at lower-than-usual levels due in part to heavy export demand from Europe, and profit margins are high as refiners try to meet consumption headed into winter heating oil use.

Product supplied by refiners, a proxy for demand, was at 19.7 million bpd over the last four weeks, off by 7% from the same time period a year ago. Demand has sagged as the economy has started to slow in response to persistently high energy costs.

Bearish Factor: Demand to Weaken

The International Energy Agency (IEA) said on Wednesday demand growth would grind to a halt in the fourth quarter. Additionally, expectations the U.S. Federal Reserve will continue to tighten policy could drive the U.S. Dollar beyond its recent 24-year peak. This could weigh on demand because crude oil is a dollar-denominated commodity.

Bullish Factor:  Armenia Clashes with Azerbaijan

Traders are eyeing the skirmish between Armenia and Azerbaijan. A full-fledged conflict would risk dragging in Russia and Turkey, and destabilize an important corridor for oil and gas pipelines just as war in Ukraine disrupts energy supplies.

Short-Term Outlook

We’re expecting more sideways trading until at least the end of October when the U.S. will stop drawing crude oil from its Strategic Petroleum Reserve (SPR). This could put a cap on supply. However, there will still be an issue with demand especially since the Fed may raise its key interest rate by one-full basis point on September 21.

The higher the Fed increases rates, the closer the economy comes to recession, which will weigh on demand.

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

Oil Price Fundamental Daily Forecast – Supported by IEA 2023 Outlook, but Strong Dollar Could Cap Gains

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Wednesday after recovering from earlier weakness. The price action suggests investors are still digesting yesterday’s scorching U.S. consumer inflation report and the prospect of a full-percentage point rate hike ahead of today’s government inventories report.

Trading action aside, however, today’s early volatility is more than likely being fueled by signs of bullish demand in an International Energy Agency (IEA) report.

In other news, traders are surprisingly ignoring a private industry inventories report that showed a larger-than-expected build.

At 10:22 GMT, October WTI crude oil futures are trading $87.74, up $0.43 or +0.49% and December Brent crude oil is at $92.74, up $0.52 or +0.56%. On Tuesday, the United States Oil Fund ETF (USO) settled at $72.01, down $0.36 or -0.50%.

IEA Sees Demand Slowing in Q4, but Picking up in 2023

Growth in global oil demand is set to grind to a halt in the fourth quarter of this year as an economic slowdown deepens, the International Energy Agency (IEA) said on Wednesday, but said it would resume strongly in 2023.

I know what you’re thinking. This reads like bearish news so why did prices turn higher following its release? Prices probably didn’t fall on this outlook because the bearish news has been priced in for months or essentially since the U.S. Federal Reserve began raising rates aggressively to combat soaring inflation.

The Fed along with the other major central banks are trying to stop the rise in inflation and in attempting to do this, they are slowing the economy. Some traders are also saying that lower demand has been priced in because of growing signs of a global recession and China’s COVID lockdowns.

While the IEA acknowledges these factors, it also sees robust economic growth next year as well as the lifting of China’s COVID restrictions. Furthermore, it predicts air travel will boost jet fuel demand.

Looking Ahead…

The U.S. Energy Information Administration (EIA) will release its inventories data at 14:30 GMT. It is expected to show that crude oil inventory rose 1.9 million barrels during the week-ending September 9.

This report follows data from the American Petroleum Institute (API) that shows an unexpected build the week-ending September 9 of 6.035 million barrels, while analysts predicted a draw of 200,000 barrels.

The API also reported a draw in gasoline inventories this week of 3.23 million barrels for the week ending September 9. Additionally, distillate stocks saw a build of 1.75 million barrels for the week, on top of last week’s 1.833-million-barrel increase.

Despite the early strength, crude oil traders should be leery of the U.S. Dollar. A stronger U.S. Dollar tends to weigh on demand for dollar-denominated crude oil. With the greenback testing a 24-year high, buyers may be reluctant to chase crude oil prices so gains could be capped.

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

Oil Price Fundamental Daily Forecast – Stronger as Supply Concerns Offset Demand Worries

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Tuesday in a volatile, two-sided trade. After trading lower early in the session on concerns about lower demand in China and aggressive increases in U.S. and European interest rates, the market recovered to turn higher for the session on the back of worries about tight fuel supplies ahead of winter.

At 09:27 GMT, October WTI crude oil is trading $88.77, up $0.99 or +1.13% and December Brent crude oil is at $93.75, up $0.82 or +0.88%. On Monday, the United States Oil Fund ETF (USO) settled at $72.36, up $1.26 or +1.77%.

Moves by Chinese Government Indicate Weakening Economy

Crude oil prices fell early Tuesday on worries over Chinese demand as the government announced it will continue to roll out phased policies to stabilize its economy with a focus on reviving consumption and boosting investment, and implement these policies as soon as possible, according to Premier Li Keqiang.

This is a sign that the economy is weakening, which is raising concerns over falling demand for crude oil.

The world’s second-largest economy narrowly avoided contracting in the second quarter amid widespread COVID-19 lockdowns and weakness in the property market which have dented consumption and factory activity.

Recent data showed China’s economy lost further momentum in August, with factory activity extending declines and export growth slowing as demand wanes amid strict COVID restrictions.

In other sign of slowing demand, the number of trips taken over China’s three-day Mid-Autumn Festival holiday shrank, with tourism revenue also falling, official data showed, as strict COVID-19 rules discouraged people from travelling, Reuters reported.

Rising Interest Rates Raising Concerns over Economic Slowdown in US, Europe

Recent hawkish comments from Federal Reserve and European Central Bank (ECB) officials have put investors on alert for possible recessions in the U.S. and Europe. The U.S. economy is a lot stronger than the Euro Zone economy at this time, nonetheless, an economic slowdown will lead to lower demand for crude.

Today’s U.S. consumer inflation report is expected to lock in a 75 basis point rate hike by the Fed next week. Over the weekend, ECB policymakers called for more aggressive rate hikes to combat soaring inflation.

The key today will be how the report affects the U.S. Dollar since crude oil is a dollar-denominated commodity. A stronger dollar tends to be bearish for crude. A weak dollar could be supportive.

Tighter Inventories Supporting Prices

On Tuesday, worries about tighter inventories are offsetting concerns over lower demand. One worry is the huge drop in the Strategic Petroleum Reserve (SPR). During the week-ending September, the SPR dropped to 434.1 million barrels, its lowest level since October 1984.

Additionally, today’s American Petroleum Institute (API) and Wednesday’s U.S. Energy Information Administration (EIA) weekly inventories reports are expected to show that crude oil supplies are expected to drop by around 200,000 barrels in the week-ending September 9. This would be the fifth straight weekly draw down.

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

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

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

At 06:08 GMT, October WTI crude oil futures are trading $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 are eroding 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 off energy supplies.

China Oil Demand May Shrink for 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 a home during upcoming holidays and reduces fuel consumption, Reuters reported.

Strong Dollar Expected to Weigh on Crude Demand

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

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

Daily October WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher, following the confirmation the September 8 closing price reversal bottom.

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

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

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

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

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $85.80 is likely to determine the direction of the October WTI crude oil market on Monday.

Bullish Scenario

A sustained move over $85.80 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into a pair of 50% levels at $88.26 and $89.43. The latter is the last potential resistance before the $90.39 main top.

Bearish Scenario

A sustained move under $85.80 will signal the presence of sellers. This could trigger a break into $84.20. Aggressive counter-trend buyers could come in on the first test of this level, but if it fails then look for a plunge into $81.85, followed by the minor bottom $81.20.

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

Oil Price Fundamental Daily Forecast – Putin’s Supply Threat Spooks Weaker Short-Sellers

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished sharply higher on Friday and nearly up for the week as supply threats offset concerns over weaker demand.

Prices fell to a seven-month low earlier in the week, putting the market in a position to post about a 3 percent loss for the week, but those losses were nearly recovered late in the session on Friday.

On Friday, October WTI crude oil futures settled at $86.79, up $3.25 or +3.89% and December Brent crude oil closed at $91.71, up $3.46 or +3.92%. The United States Oil Fund ETF (USO) settled at $71.11, up $3.02 or +4.43%.

Supportive Factor One: OPEC+ Output Cut

Prices were supported early in the week when OPEC+ members agreed to a small production cut of 100,000 barrels per day to bolster prices.

The 100,000 bpd reduction by OPEC+ amounts to only 0.1% of global demand. The group also agreed they could meet any time to adjust production before the next scheduled meeting on October 5.

The move by OPEC+ is being described as “symbolic”, but probably explains why there wasn’t much of a follow-through to the upside after the initial bullish reaction on Monday. Some say the group was trying to put a floor in Brent crude oil at about the $90 level but that attempt failed miserably on a gloomy demand outlook.

We’ll have to wait until next week to see if Friday’s rebound rally continues, but OPEC and its allies may have missed a chance to shore up the market at this time because subsequent movement later in the week suggests that weakening demand could eventually dominate the market, driving prices lower.

Supportive Factor Two: Russia’s Threat to Cut Off Energy Supplies

While OPEC+’s attempt to stop the recent price slide failed to impress the short-sellers, President Vladimir Putin’s threat to cut off all energy supplies if price caps are imposed on Russia’s oil and gas exports, seemed to be strong enough to spook the weaker shorts while erasing nearly two days of selling pressure.

Short-Term Outlook

Bullish traders are locked in on Putin’s threat to supply, while the bears are waiting for a global recession and lower demand. The short-term direction will likely be determined by what comes first.

Will Putin follow-through on his threat to cut-off energy supplies before the world falls into recession? Or will the recession start first? Or can the central banks control the expected economic weakness enough to create a “soft-landing” and a quick recession.

These answers to these questions are important because they could mean the difference between $90 – $100 a barrel Brent crude and $60 – $50 a barrel oil.

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

Crude Oil Price Update – Counter-Trend Buyers Facing Challenge at $85.80

U.S. West Texas Intermediate crude oil futures are edging higher on Friday supported by real and threatened cuts to supply, according to Reuters.

Despite the market’s strong performance the past two sessions, crude oil is still poised to post a second consecutive weekly loss. This week’s losses are being fueled by a bleak demand outlook due to a number of aggressive interest rate hikes and China’s COVID-19 curbs.

At 11:53 GMT, October WTI crude oil is trading $85.01, up $1.47 or +1.76%. On Thursday, the United States Oil Fund ETF (USO) settled at $68.00, up $0.38 or +0.56%.

On the bullish side of the equation, Russian President Vladimir Putin is threatening to halt oil and gas exports to Europe if price caps are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices.

In bearish news that could have an impact on demand, the city of Chengdu is extending a lockdown for most of its more than 21 million residents on Thursday while millions more in other parts of China were told to shun travel during upcoming holidays.

Daily October Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside earlier today with the confirmation of yesterday’s closing price reversal bottom.

A trade through $81.20 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a trade through $90.39.

On the downside, the major support is the long-term Fibonacci level at $81.85. On the upside, the first resistance is a minor pivot at $85.80, followed by the long-term 50% level at $88.26.

Daily Swing Chart Technical Forecast

Trader reaction to $83.23 is likely to determine the direction of the October WTI crude oil market on Friday.

Bullish Scenario

A sustained move over $83.23 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the pivot at $85.80.

Look for sellers on the first test of $85.80. Overcoming it, however, could extend the rally into the major 50% level at $88.26.

Bearish Scenario

A sustained move under $83.23 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to lead to a retest of the major Fibonacci level at $81.85, followed closely by the minor bottom at $81.20.

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

Crude Oil Price Update – Lower Ahead of EIA Inventories Data after API Reports Surprise Build

U.S. West Texas intermediate crude oil futures are inching higher on Thursday after breaking longer-term Fibonacci support earlier in the session, as buyers and sellers continue to evaluate whether worries over tightening supply, or concerns about a global recession leading to lower demand will dictate the direction of the next major move.

At 09:04 GMT, October WTI crude oil futures are trading $81.95, up $0.01 or -0.01%. On Wednesday, the United States Oil Fund ETF (USO) settled at $67.61, down $3.81 or -5.33%.

API Reports Unexpected Storage Build

On the supply side, the American Petroleum Institute (API) reported a build this week for crude oil of 3.645 million barrels, while analysts predicted a draw of 733,000 barrels.

The build comes as the Department of Energy released 7.5 million barrels from the Strategic Petroleum Reserves in the week ending September 2, leaving the SPR with just 442.5 million barrels.

The API also reported a draw in gasoline inventories the same week of 836,000 barrels. Distillate stocks saw a build of 1.833 million barrels for the week.

Looking Ahead …

Today’s U.S. Energy Information Administration (EIA) weekly inventories report, due to be released at 15:00 GMT, is expected to show a draw of about 2.0 million barrels of crude oil.

There is breaking news ahead of the NYMEX opening. According to reports, Russian President Vladimir Putin has threatened to retaliate against any move by the European Union to cap the price of Russian gas by halting flows completely and suggesting a deal allowing Ukrainian grain to be exported to world markets could be disrupted.

Daily October WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at $81.23 will signal a resumption of the downtrend. A move through $90.39 will change the main trend to up.

The market is currently trading on the weak side of a long-term retracement zone at $81.85 to $88.26, making it resistance.

Daily Swing Chart Technical Forecast

Trader reaction to $81.85 is likely to determine the direction of the October WTI crude oil market on Thursday.

Bearish Scenario

A sustained move under $81.85 will indicate the presence of sellers. If this creates enough downside momentum then look for a possible break into a series of main bottoms at $79.83, $78.54 and $76.47 over the near-term.

Bullish Scenario

A sustained move over $81.85 will signal the presence of buyers. If this generates enough upside momentum then look for a near-term surge into $85.80, followed by $88.26.

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