WTI Crude Oil futures are currently at crossroads as traders await cues from the Federal Reserve’s interest rate decision to take prices higher or lower. Expectations are for a minor interest rate hike of 0.25%, a figure lower than prior hikes, mainly in response to economic data suggesting an economic slowdown in its infancy.
A report from the U.S. Energy Information Administration (EIA) revealed an increase in demand of 178,000 barrels per day (bpd) in November 2022, to 20.59 million bpd. Given that demand grew in China’s lockdown, the reopening of China’s economy, a top five oil-consuming nation, may provide significant tailwinds for oil futures going into 2023.
Currently, the price of WTI Crude Oil futures (NYMEX: CL) is trading within a wide range, with support and resistance at $72.81 and $82.56 barrels per day (BLL), respectively. Both zones have been met with bullish and bearish momentum at their lows and highs as traders monitored the levels for attractive entry points, leading to reversals.
The price failed to reach support at $72.81 BLL after a bounce from the resistance level of 82.56 BLL. Bullish traders began to dominate price action at the $76.67 level, which coincides precisely with the Fibonacci Retracement Golden Ratio of 61.80%. This indicates a weakening bearish retracement from the highs, a shift in sentiment to bullish and a lower chance of price retracing 100%.
Traders will closely monitor the resistance of $82.56 BLL in anticipation of a potential breakout on high volumes, driven by bullish enthusiasm on the back of oil demand outweighing supply. A potential target at $92.64 BLL is probable if bulls markup prices.
The closest support level in proximity to price action at the 61.80% retracement or $76.67 BLL level will be of interest to traders monitoring weakness in bearish momentum. Should the price approaches this level on weak volume, it may provide upside momentum in future.
Due to China’s economic reopening, oil demand is currently propped up and will likely remain elevated soon. OPEC is set to meet today, and traders anticipate unchanged output levels from the organization. Therefore, the outlook for oil prices is positive, mainly due to demand-side pressures.
Sources: EIA, Reuters, TradingView