Crude Oil Week Ahead: China Beats Estimates, Oil Hits $80 Barrier

Article Outline

Key Events: China, Trump Returns, and PMI data
Technical Analysis: USOIL 3-Day Time Frame
Technical Analysis (TA) Tip: Chart and RSI Patterns

Oil’s 2025 uptrend reached the $80 resistance level before retreating to the $77 zone, driven by better-than-expected Chinese economic data and traders hedging against upside risks amid U.S. sanctions on Russia and heightened winter demand. Despite these factors, oil’s primary trend remains bearish, and the sustainability of 2025’s upward momentum—amid Chinese economic growth, seasonal demand, and geopolitical risks—remains uncertain.

Trump Returns on Monday

Donald Trump is set to take office on Monday, January 20th, coinciding with a U.S. market holiday. Promising drastic policy changes from day one, Trump’s agenda introduces significant volatility risks. His "drill, baby, drill" stance poses potential downside risks for oil prices, while geopolitical tensions and oil supply sanctions keep hedging for upside risks on the table.

Chinese Economic Update:

China’s latest economic data has bolstered oil’s positive trajectory:

New Loans: Increased from 580B to 990B, reaching a 3-month high
Trade Balance: Surged to a 10-month high with a surplus of 753B
Industrial Production: Rose from 5.4% to 6.7%, marking an 8-month high
GDP: Jumped from 4.6% to 5.4%, achieving the government’s growth target for 2024
Foreign Direct Investment: Rebounded from -27.9% to -27.1%, reaching an 8-month high

However, questions linger over the sustainability of this uptrend. Much of the positive momentum stems from a late stimulus blitz and an export boom ahead of expected U.S.-China tariff tensions under Trump’s administration.

Key Chinese data to watch this week includes loan prime rates, scheduled for release on Monday.

Technical Analysis: Quantifying Uncertainties

Crude Oil Week Ahead: 3Day Time Frame – Log Scale

Source: Tradingview

Oil prices rebounded from the $80 resistance level, which aligns with the lower boundary of a yearlong triangle pattern connecting consecutive lows from December 2023 to July 2024. The Relative Strength Index (RSI) has climbed toward overbought levels, last observed in April 2024 when oil peaked at $87.20 before retreating to $68. Currently, crude oil is one resistance level away from a bullish breakout, with the lower boundary of the respected triangle pattern between September 2023 and August 2024 marking the $80 zone.

Scenarios:

Bullish Scenario: A firm close above $80 could extend gains toward resistance levels at $84 and $88.
Bearish Scenario: Dropping below the $76–$75.50 zone, now serving as support, could trigger declines toward $72 and $68.

Technical Analysis (TA) Tip: Chart and RSI Patterns

Two key patterns stand out on the crude oil chart:

1. Triangle Pattern: The boundaries of the triangle continue to shape oil’s price trend.

2. RSI Inverted Head and Shoulders: This continuation pattern on the RSI supported the bullish trend toward recent highs.

With current resistance and overbought conditions, a reversal is possible unless a bullish breakout above $80 is confirmed.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

On You tube: Forex.com

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.