WTI Oil Eyeing Deeper Retracement, Downside Risks Remain in Play
- OPEC+ Members Re-Affirm Commitment to Production Cuts till the End of 2023.
- China Covid Cases and Lockdowns Remain a Downside Risk.
- Hammer Candlestick Close Hints at Further Upside for WTI.
- To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section.
WTI FUNDAMENTAL OUTLOOK
Crude Oil rallies back above the $80 a barrel handle following yesterday’s selloff. The commodity came under severe pressure when the Wall Street Journal reported that OPEC+ was considering a 500k barrel a day production increase coupled with growing demand concerns around China.
As the news filtered through of a potential production increase WTI hit an 11-month low around $75.30 a barrel. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman rubbished these claims by stating that OPEC+ remains ready to intervene and reduce production further if needed. The comments from the Saudi Energy Minister were backed up by the UAE as well as Kuwait who reiterated that any comments around a potential production increase were misleading. The resulting impact saw strong rally in WTI prices closing the day marginally positive and above the all-important $80 a barrel handle.
In early European trade WTI has pushed higher helped by a softer dollar and Chinas rising Covid numbers. Chinese authorities meanwhile confirmed that they will be guiding local officials in implementing 20 Covid measures in an effort to regain control of the situation. The decision by OPEC+ to cut production by two million barrels a day till the end of 2023 suddenly seems a smart move given the headwinds facing the commodity at present.
Looking ahead to the rest of the day we have a host of Federal Reserve policymakers speaking as well as API Crude Oil data. These events are likely to add volatility to WTI prices with a continuation of the recent hawkish rhetoric by FED policymakers likely to boost the dollar and keep WTI prices under pressure.
For all market-moving economic releases and events, see the DailyFX Calendar
From a technical perspective, the hammer candlestick close on the daily timeframe hints at further upside for the pair. The steep decline over the past four days coupled with a new low also supports the idea of a deeper retracement. Any bounce from here would first need to clear the $82 area (October 18 low) if we are to see any further upside. The driving force behind any move is likely to come from the dollar as well as any continued chatter from OPEC+ members and Chinese officials.
WTI Crude Oil Daily Chart – November 22, 2022
Resources for Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicators for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.