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James Hyerczyk
Crude Oil

International-benchmark Brent crude oil futures are inching higher early Friday on low volume after plunging the previous session on fears of a global recession and uncertainty over Fed monetary policy.

Crude oil prices turned south on Thursday after a flash report showed the first contraction in the manufacturing sector in nearly a decade and after Philadelphia Federal Reserve Bank President Patrick Harker said that he does not see the case for additional stimulus.

At 03:14 GMT, December Brent crude oil is trading $59.02, up $0.07 or +0.12%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $64.45 will change the main trend to up. A move through $55.29 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $60.34 will change the minor trend to up, and a move through $60.65 will shift momentum to the upside.

The main range is $66.50 to $55.29. Its retracement zone at $60.90 to $62.22 is resistance. This zone stopped the rally at $60.65 on August 13.

The intermediate range is $64.45 to $55.29. Its retracement zone at $59.87 to 60.95 is also resistance. This zone stopped the rally at $60.34 on August 20.

The short-term range is $55.29 to $60.65. Its retracement zone at $57.82 to $57.22 has provided support since August 9.


Daily Swing Chart Technical Forecast

Based on this week’s price action, the direction of the December Brent crude oil futures contract on Friday is likely to be determined by trader reaction to the intermediate 50% level at $59.87.

Bearish Scenario

A sustained move under $59.87 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possible extend into the short-term retracement zone at $57.82 to $57.22. If this zone fails as support then look for an acceleration to the downside.

Bullish Scenario

A sustained move over $59.87 will signal the presence of buyers. The first targets are lined up at $60.34, $60.65 and $60.90. The latter is the trigger point for an acceleration into the main Fibonacci level at $62.22. This is another potential trigger point for an acceleration to the upside.


Look for volatility to hit at 14:00 GMT when Fed Chairman Jerome Powell begins his speech at Jackson Hole, Wyoming. Actually, you should start watching earlier than that since a transcript of the speech may be released earlier in the trading session.

If Powell indicates the Fed is going to be aggressive in attempting to perk up the economy and prevent a recession, then crude oil prices could soar. If Powell isn’t clear as to the next moves by the Fed then crude oil prices could plunge. Powell has to deliver the speech with clarity and conviction.

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