Crude Oil Price Update – Needs to Hold $41.72 to Sustain Upside Bias

U.S. West Texas Intermediate crude oil futures are edging lower on Friday, giving up some of this week’s gain. Prices are being capped by doubts about demand recovery due to the COVID-19 pandemic and rising supply.

Although the futures contract is hovering near the high of its two-month trading range and slightly above a long-term 50% level, bullish traders are having a hard time extending the rally because of lingering demand concerns.

At 13:44 GMT, September WTI crude oil is trading $42.16, down $0.08 or -0.19%.

The market was boosted this week by U.S. government data showing crude oil, gasoline and distillate inventories all declined the week-ending August 7, but the global oil supply is rising due to OPEC and its allies increasing output this month.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $43.52 will signal a resumption of the uptrend. The main trend changes to down when sellers take out the nearest main bottom at $38.72.

The minor trend is also up. The minor trend will change to down on a trade through $41.06. This will also shift momentum to the downside. Meanwhile, a move through $42.94 will reaffirm the current uptrend.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $42.16, the direction of the September WTI crude oil market the rest of the session on Friday is likely to be determined by trader reaction to the major 50% level at $41.72.

Bullish Scenario

A sustained move over $41.72 will indicate the presence of buyers. If this can create enough upside momentum then look for a rally through the minor top at $42.94 and into the five-month high at $43.52.

Bearish Scenario

A sustained move under $41.72 will signal the presence of sellers. This could lead to a labored break with potential support levels at $41.12, $41.06 and $40.55. The latter is a potential trigger point for an acceleration to the downside with the main bottom at $38.72 the next major target.