Brent Crude Oil Price Update – Strengthens Over $62.93, Weakens Under $60.32

International-Benchmark Brent crude oil futures finished higher on Friday, but remained inside the previous session’s wide range. This tends to indicate investor indecision and impending volatility.

Tensions remained high following Thursday’s attack on two oil tankers in the Gulf of Oman, however, without an actual supply disruption, gains were limited. Continuing to keep the pressure on prices is rising U.S. stockpiles and concerns over lower future demand due to the global economic slowdown.

On Friday, August Brent crude oil futures settled at $62.01, up $0.70 or +1.13%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but the developing double-bottom formation suggests the presence of buyers. A trade through $64.13 will change the main trend to up. A move through $59.45 will signal a resumption of the downtrend.

The main range is $51.90 to $73.95. Its retracement zone at $62.93 to $60.32 is controlling the near-term direction of the market. On Friday, the market closed inside this zone, suggesting a support base may be forming.

The short-term range is $72.41 to $59.45. If the trend changes to up then its 50% level at $65.93 will become the primary upside target. This is followed by a major 50% level at $67.60.

Daily Swing Chart Technical Forecast

Based on last week’s price action and the close at $62.01, the direction of the August Brent crude oil futures contract on Monday is likely to be determined by trader reaction to the 50% level at $62.93 and the 61.8% level at $60.32. Holding inside this zone will be another sign of trader indecision.

Bullish Scenario

Taking out $62.93 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the main top at $64.13. Taking out this main top will change the main trend to up. This could trigger a surge into the 50% level at $65.93.

Bearish Scenario

The inability to overtake $62.93 will signal the presence of sellers. Taking out $60.32 will indicate the selling is getting stronger. This could lead to an acceleration to the downside if $59.57 and $59.45 are taken out. The daily chart is wide open to the downside with the next major downside target the December 24 main bottom at $51.90.

Overview

Holding inside the retracement zone at $62.93 to $59.45 indicates something big may be developing. Given this week’s events, the next move is likely to be news driven. Traders seemed to have absorbed the bearish forecasts from the EIA and IEA so we’ll be looking for something affecting the supply side.