WTI Oil Price, Charts and Analysis:
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WTI Basic view
Crude oil has struggled since the week as technicals and fundamentals create the perfect cocktail. Chinese lunar holidays combined with some economic and demand concerns kept oil prices on the back foot.
There are several factors contributing to lower oil prices this week. Optimism on demand from China remains intact following Chinese holidays this week, while rumors of Chinese companies aiding Russia’s war effort further dampened the spirits of oil bulls. If the rumors are true, this could heighten the strained relationship between the US and China, which could hurt the expected high demand from China.
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Oil supplies continued to build, as evidenced by the API crude oil inventory data, which rose for the fourth straight week. That’s after Reuters (citing five OPEC+ sources) said the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries and its allies known as OPEC+, led by Russia, are unlikely to recommend any changes in oil prices. Resultant policy, develops the fear of oversupply.
Later in the day, we have the Energy and Information Administration’s (EIA) oil inventory report, which is of particular interest in light of the API data release. Markets will no doubt be looking for confirmation from the API data, which could see oil prices fall below the $80 barrel mark.
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From a technical perspective, WTI posted a 7-week high on Monday before finding resistance at its 100-day MA. Yesterday’s daily timeframe saw the completion of an overnight star pattern indicating a downside below the $80 barrel mark. A daily candle could open a test of the trend line closing below the $80 mark and the 50-day MA resting around $78 per barrel. A daily candle closing below the $79 mark would be a reversal in price action as we remain generally bullish on the daily time frame.
WTI crude oil Daily Chart – January 25, 2022
IG Customer Sentiment Data: Bear
IGCS shows that retail traders are currently long oil, with 64% of traders currently holding long positions. At DailyFX we typically take a contrarian view of public sentiment, and traders being long suggests that crude oil may continue to fall.
Written by: Zain Vawda, Market Writer for DailyFX.com
Find and follow Zain on Twitter: @zvawda