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WTI oil prices reached its highest levels since last November, breaking above the April high of $83.50 briefly, before coming off its best levels. Traders will be watching to see how oil prices will close the session today. The OPEC+ ongoing supply cuts are continuing to offset concerns over demand. But will WTI manage to climb to $85 and higher?

Crude oil prices came off their best levels in reaction to the latest crude oil inventories report, showing a surprisingly large build of 5.9 million barrels of crude last week. However, the other aspects of the report were strong as refinery utilization rate increased sharply and stocks of oil products dropped.

Crude oil outlook: investors continue to ignore demand concerns

So far, investors have chosen to ignore demand concerns. We have seen weakness in global manufacturing sector, although so far this hasn’t impacted oil prices in a meaningful way. Chinese markets have struggled all year due to weakness in data there. Next week, we will get more updates on the health of the world’s second-largest economy with the release of industrial production and retail sales among a few other data pointers on Tuesday. This week, we saw consumer prices come in at an annual rate of -0.3% (deflation). While falling Chinese prices is good news on the inflation front, CPI in deflation territory is indicative of a weak economy. This was highlighted in the trade data showing a 12.4% drop in imports from last year in July. But if we see next week’s data deteriorate, then this could raise recession alarm bells and weigh on prices amid demand concerns.

Crude oil outlook: WTI technical analysis

The fact that WTI has broken the post-OPEC high of $83.50 made in April means that people who had been bearish or skeptical of the group’s efforts working have been proven wrong. As more bearish speculators now step aside, oil prices should continue trending higher for as long as there are no major demand worries. So, a move up to $85 looks increasingly likely from here. But in the short-term, don’t be surprised to see a dip as prices are clearly overbought, and many risk assets have struggled this week.

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Source: TradingView.com

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