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WTI Crude Oil Retreats as US Inventories Jump and China Covid Fears Escalate

WTI Crude Oil Retreats as US Inventories Jump and China Covid Fears Escalate


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WTI Fundamental Outlook

Crude Oil continues to struggle this week and looks on course for its third successive day of losses. Demand fears have returned as China reported its biggest daily jump in covid cases in six months. This morning news filtered through that China’s Guangzhou has locked down another district which is likely to weigh further on oil prices.

Oman Minister of Energy Salim Al-Aufis initial comments yesterday added further pressure on oil prices. The Minister stated that current prices are not sustainable with his belief that prices will retreat to the $70-$80 a barrel range after the winter season. He commented on the upcoming OPEC+ meeting scheduled for December 4, stating that any decision would largely be based on the economic outlook from Europe. If the message out of Europe regarding a recession and higher interest rates remain the same OPEC+ may decide on further cuts.

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US API data on oil stocks released yesterday indicated an increase of inventories by 5.61 million barrels for the week ended November 4. The increase in inventories comes at the wrong time as US domestic demand has showed signs of a slowdown weighing further on prices.

The Energy Information Administration (EIA) meanwhile published its short-term energy outlook yesterday in which it continued its trend of cutting forecasts regarding US supply growth for 2023. The Energy Agency now expects output to grow by 490 million barrels a day YoY in 2023. Later in the day we have a bunch of data from the EIA which could further weigh on oil prices.

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WTI Crude Oil Daily Chart – November 9, 2022

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Source: TradingView

From a technical perspective, WTI began the month on the front foot following its first month of gains since May. However, since printing a new high early on Monday oil prices have seen a sharp slide back below the psychological $90 level.

The daily timeframe has printed an evening star candlestick formation which hints at further downside ahead. There is a confluence area just below current price around the $86-$87.50 area. There is an ascending trendline coupled with the 20 and 50-SMA which could potentially halt further losses.

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Written by: Zain Vawda, Market Writer for

Contact and follow Zain on Twitter: @zvawda

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