Crude Oil Price Update – Bearish Under Short-Term Pivot at $63.76

Concerns over rising U.S. production are helping to drive March West Texas Intermediate crude oil futures lower on Friday. Traders are reacting to data in yesterday’s U.S. Energy Information Administration’s weekly inventories report that showed a jump in U.S. production the week-ended January 12. U.S. crude oil production stood at 9.75 million barrels per day (bpd) on January 12, data from the EIA showed.

Additionally, the International Energy Agency (IEA), in its monthly report said that global stocks have tightened substantially, aided by OPEC cuts, demand growth and Venezuelan production hitting near 30-year lows. But warned that rapidly increasing production in the United States could threaten market balancing.

“Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico,” the IEA said of 2018 production.

Daily Technical Analysis

 

The main trend is up according to the daily swing chart. However, momentum appears to be shifting to the downside with the formation of the closing price reversal top on January 16.

A trade through $64.74 will negate the reversal top and signal a resumption of the uptrend. A move through today’s intraday low at $62.78 will indicate the selling is getting stronger.

The short-term range is $64.74 to $62.78. Its 50% level or pivot is $63.76. The pivot is controlling the short-term direction.

The main range is $56.07 to $64.74. Its retracement zone comes in at $60.41 to $59.38. This is the primary downside target and value zone.

Daily Technical Forecast

Based on the early price action, the direction of the crude oil market the rest of the session will be determined by trader reaction to the steep downtrending Gann angle at $63.24.

A sustained move under $63.24 will signal the presence of sellers. This could lead to a retest of today’s intraday low at $62.78. If this price is taken out with rising volume, we could see a test of the uptrending Gann angle at $61.82.

A sustained move over $63.24 will indicate the presence of buyers. If buying volume increases on the move then look for a possible rally into the pivot at $63.76, followed by the downtrending Gann angle at $63.99.