Crude oil and futures trading

Crude Oil (CL) Futures Rise amid Soft USD, Lower Crude Inventory

  • US dollar weakens after FOMC meeting.
  • Risk sentiment remains positive amid a better-than-expected earnings report.
  • Crude oil inventories significantly drop.

Today’s crude oil (CL) futures price analysis is bullish as investors are willing to take risks. Crude stocks went down, and gasoline demand in the US increased, which helped prices rally today.

“Risk sentiment has recovered from recession fears due to the ongoing US earnings optimism and less aggressive Fed rhetoric on rate hikes, which supported a rally in the crude market,” CMC Markets analyst Tina Teng said, adding that a weakened US dollar has also lifted commodities prices.

As expected, the US Federal Reserve raised its key interest rate by three-quarters of a percentage point to slow inflation. However, the dollar fell because investors hoped the Fed would raise rates more slowly in the future.

When the dollar gets weaker, oil priced in dollars costs less for people in other countries to buy.

On the supply side, US crude oil stocks dropped by 4.5 million barrels last week, more than the expected drop of 1 million barrels. At the same time, gasoline demand in the US went up by 8.5% week over week, according to the Energy Information Administration.

According to Reuters, a senior G7 official said on Wednesday that the Group of Seven richest economies wants to have a price-capping mechanism for Russian oil exports in place by December 5. This is also boosting oil prices.

Crude oil (CL) futures technical price analysis:

Crude oil (CL) futures 4-hour chart

Technically, the bias for crude oil is bullish as the price has been trading above the 20-period SMA. However, the price is still wobbling within the rising wedge pattern.

If the bulls manage to break out of the wedge, the price may test the horizontal level of 101.50 ahead of 105.21. On the flip side, the bears may dominate if the price falls below the 20-period SMA. On breaking the support of the rising wedge, the price of crude oil may plummet to the 90.55 horizontal support level.