Crude Oil Price Update – Buyers Not Impressed by OPEC+ Deal, Could Test $27.40 – $26.04

U.S. West Texas Intermediate crude oil futures are see-sawing most of the session on Monday, and currently in a position to turn lower. The price action suggests that traders aren’t too impressed with the historic OPEC+ deal to cut production by nearly 10 million barrels per day. Despite the agreement, trades seem more concerned about the current oversupply situation and the demand destruction caused by the Coronavirus pandemic.

At 10:42 GMT, June WTI crude oil is trading $29.10, up $0.28 or +0.97%.

The major concern for some traders is the lack of participation in the plan to reduce the overall global supply by the United States and other major producing countries.

“Even if these cuts provide a floor to prices they will not be able to boost prices given the scale of inventory builds we are still staring at,” Energy Aspects analyst Virendra Chauhan said, referring to fast-filling storage amid the slide in demand from end users.

“The absence of hard commitments from the United States and other G20 members is a short-coming of the deal.”

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $37.15 will change the main trend to up. A move through $21.64 will signal a resumption of the downtrend.

Despite having rallied nearly a month since its last main bottom on March 18 at $21.64, the momentum turned lower earlier today when sellers confirmed last Thursday’s closing price reversal top. A trade through $33.15 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is $48.92 to $21.64. Its retracement zone at $35.28 to $38.50 is the primary upside target and potential resistance area.

The short-term range is $21.64 to $33.15. Its retracement zone at $27.40 to $26.04 is the next downside target and potential support area. We could see a technical bounce on the first test of this area if enough counter-trend buyers return.

Daily Technical Forecast

Based on the early price action and the current price at $29.10, the direction of the June WTI crude oil market the rest of the session on Monday is likely to be determined by trader reaction to the uptrending Gann angle at $30.14.

Bearish Scenario

A sustained move under $30.14 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to continue into the short-term 50% level at $27.40, followed by the support cluster at $26.04 to $25.89.

The Gann angle at $25.89 is a potential trigger point for an acceleration to the downside with the next target angles coming in at $23.77 and $22.70. The latter is the last potential support angle before the $21.64 main bottom.

Bullish Scenario

A sustained move over $30.14 will signal the presence of buyers. The market has room to run over this level with the first target $33.15, followed by a downtrending Gann angle at $34.92 and a 50% level at $35.28.