VOT Research Desk
Nov1,2022
Market Analytics and Considerations
WTI is looking for a Triangle Formation Flare up.
October witnessed the first monthly gain for WTI since May.
Future actions will be driven by more cutbacks by OPEC+ and rate spikes by the Fed Reserve.
Fundamental Perspective
After a less than great week’s beginning yesterday, crude oil is marching upward this morning. Despite yesterday’s dips, WTI nonetheless managed to register gains for the first time since May. The rebound today occurred in tandem with better-than-anticipated Caixin Manufacturing PMI figures from China, which could give lingering demand fears fresh life.
The Chinese city of Zhengzhou, which is home to Foxxconn’s iPhone plant, stated this morning that some covid rules will be relaxed starting at 6AM as part of the country’s “Zero-Covid” policy. Given that oil imports fell in the first three quarters of the year for the first occasion since 2014, there is still doubt about China’s appetite. Imports are down 4.3% year over year. As WTI prices aim to increase, this is clearly a cause for concern.
The US domestic oil production of WTI crude oil 
After the production limits were announced on October 5th, there has been an ongoing back and forth between OPEC+ and the US. Last week, the US reciprocated in kind by releasing 1.9 million barrels from its SPR, although this did not appear to have the expected impact on oil prices. At 11.98 million barrels per day in August, US crude output increased by 0.9%, reaching its highest level since the pandemic’s start. For its part, OPEC+ remains possible to declare additional production cutbacks going forward since it anticipates a drop in Eurozone demand as a recession looming and winter draws near.
The rest of the week has a lot of potential for volatility and the direction WTI may take. On Wednesday, the EIA will release data on crude oil inventories first. This will be followed by the Federal Reserve meeting, which is predicted to reveal information about the tightening bias and the US prognosis for the remainder of the year. WTI may rise if Fed policymakers express even the slightest dovishness.
Source: TradingView
Technically speaking, WTI’s first positive month since May stopped the monthly timeframe’s drop. The price climbed back over the 20-SMA after falling beneath it in September thanks to the good month. The weekly supported the notion of higher prices by closing above the 38.2% fib mark on a bullish reversal candle.
We can see the triangle pattern in action well on a daily time scale. Given the abundance of data events anticipated, a breakout might happen as soon as this week. With the $90.00 psychological threshold back in play, a bullish daily candle finish should see price remain above the 20 and 50-SMA while maintaining strength.
