WTI Oil Seeking Further Retracement, but Risks of a Fallout Still Exist

After yesterday’s selloff, WTI Crude Oil rises back over the $80 a barrel handle. When the Wall Street Journal revealed that OPEC+ was considering increasing output by 500k barrels per day in response to mounting demand worries regarding China, the commodity experienced significant pressure.

WTI fell to an 11-month bottom near $75.30 a barrel as word of a likely output rise spread. Prince Abdulaziz bin Salman, the energy minister for Saudi Arabia, shot off these assertions by saying that OPEC+ is still prepared to step in and further cut production if necessary. The UAE and Kuwait supported the Saudi energy minister’s remarks, underlining that any remarks about a prospective output rise were false. A big rebound in WTI prices as a result saw the day end modestly positive and above the crucial $80 per barrel mark.

WTI has increased in early European trade, supported by a weaker dollar and China’s soaring Covid statistics. In the meantime, Chinese authorities declared that they would be assisting local officials in putting 20 Covid steps into effect in an effort to recover control of the situation. Given the current challenges facing the commodity, OPEC+’s plan to reduce output by two million barrels per day through the end of 2023 suddenly seems like a wise move.

Source: FinancialJuice

In the coming hours, a number of Federal Reserve officials will be presenting, and API Crude Oil data will also be released. With a continuation of current hawkish tone by FED officials expected to strengthen the currency and put WTI prices under pressure, these occurrences are likely to increase volatility in WTI pricing.

The daily timeframe’s hammer candlestick closure suggests potential upward for the pair from a technical standpoint. The concept of a steeper retracement is further supported by the recent four days’ sharp decrease combined with a new low. If we are to see any additional improvement, any comeback from here would first need to clear the $82 region (low from October 18). Any action will likely be motivated by the dollar in addition to any further chitchat from OPEC+ members and Chinese authorities.

Source: TradingView

Simple Moving Averages – Daily

Candlestick Pattern

Indication Positive reversal

Low Reliability

Description After the candle starts, there is a sell off when the market is in a downtrend. The candle, however, closes at or very close to its high.

This shows that the earlier bearish attitude has weakened.

The pattern is more significant when the true body is smaller, the upper shadow is narrower, and the lower shadow is lengthier.

Black actual bodies are less bullish than white real bodies.