Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Crude Oil Prices Retreat Ahead of Inventory Reports as China Virus Cases Stay High

Crude Oil Prices Retreat Ahead of Inventory Reports as China Virus Cases Stay High

Thomas Westwater, Analyst

Crude Oil, WTI, China, Iran, Inventory Data, Technical Outlook – Talking Points

  • WTI crude and Brent crude prices retreat in Tuesday’s Asia-Pacific trading
  • US inventory data in focus in the days ahead as China’s Covid woes linger
  • WTI crude oil’s technical posture is bearish below major moving averages
Introduction to Forex News Trading
Introduction to Forex News Trading
Recommended by Thomas Westwater
Introduction to Forex News Trading
Get My Guide

Crude oil prices rose to start the week as a softer US Dollar and supply concerns supported buying. However, West Texas Intermediate (WTI) and Brent crude prices are pulling back through Asia-pacific trading. A breakdown in negotiations between Tehran and Washington helped drive prices higher. Iran’s response to a proposal presented by the European Union disappointed Western leaders.

Iran wants an investigation by the International Atomic Energy Agency (IAEA) to be halted, but that is off the table for the US and EU. US Secretary of State Anthony Blinken on Monday said a near-term deal is “unlikely.” That commentary saw WTI trim its losses by nearly a full percentage point. German Chancellor Olaf Scholz shared Mr. Blinken’s sentiment. Israel is said to have shared concerning intelligence that Iran is very close to having enough weapons-grade uranium for a bomb.

China’s Covid-19 lockdowns continue to weigh on oil’s demand outlook. This morning, the National Health Commission reported 1,048 new cases for September 12. Beijing is unlikely to ease its stance on containing the virus before October. That is when President Xi Jinping is expected to secure a third term in office. However, speculation that a gradual easing of restrictions would take place in the months following the National People’s Congress (NPC).

For now, traders have their focus on inventory data due out over the next couple of days. On Tuesday, the American Petroleum Institute (API) will report crude oil stocks data for the week ending September 09. The Energy Information Administration’s data, which typically has more influence on markets, is due out the day after. Analysts expect the EIA data to show a 200k barrel reduction in crude oil stocks and a 633k barrel build in distillate stocks.

How to Trade Oil
How to Trade Oil
Recommended by Thomas Westwater
How to Trade Oil
Get My Guide

WTI Crude Oil Technical Outlook

Prices failed to clear the 61.8% Fibonacci retracement from the December 2021/March 2022 move after an intraday climb stalled just short of the 20-day Simple Moving Average (SMA). WTI’s technical outlook is skewed to the bearish side, as prices remain below their major moving averages and the RSI and MACD oscillators sputter out below their midpoints.

If Monday’s strength returns and prices clear the 20-day SMA (green line), the 90 psychological level poses a potential challenge before the 50-day SMA (blue line). A move lower would resume the broader downtrend. And a break below the September low at 81.21 is the worst-case scenario, which would bring prices to levels not traded since early January.

WTI Crude Oil Daily Chart

crude oil chart

Chart created with TradingView

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES