Crude Oil Price Update – Closed on Bearish Side of Short-Term Retracement Zone

U.S. West Texas Intermediate crude oil futures fell on Friday as President Donald Trump’s optimistic plan to re-open the economy on May 1, failed to offset concerns over China’s worst quarterly economic contraction on record.

Investor sentiment remained cautious, with readings of economic indicators getting worse as global supply chains remain shut and large-scale production halts put millions out of work.

At 20:51 GMT, June WTI crude oil is trading $25.15, down $0.38 or 1.49%.

In other news, China’s daily crude oil throughput in March sank to a 15-month low, with state refiners maintaining deep output cuts but there are some signs of recovery as the country begins to ease coronavirus containment measures.

Additionally, ConocoPhillips on Thursday said that it will reduce planned North American output by 225,000 bpd, the largest cut so far by a major shale oil producer to deal with the unprecedented drop in demand.

Some feel prices will not make a significant turnaround until the U.S. producers get more aggressive with their output cuts.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the last main bottom at $21.64 will reaffirm the downtrend. The main trend will change to down on a move through the last main top at $33.15.

The short-term range is $21.64 to $33.15. Its retracement zone at $26.04 to $27.40 is controlling the near-term direction of the market. This area is resistance.

Short-Term Outlook

Based on Friday’s price action and the close under the short-term retracement zone, the near-term direction of the June WTI crude oil futures contract is likely to be determined by trader reaction to the short-term Fibonacci level at $26.04.

Look for the downside bias to continue as long as the market remains under $26.04. The first two downside targets are minor bottoms at $23.31 and $22.74.

If $22.74 fails as support then look for the selling to possibly extend into the main bottom at $21.64. This price is a potential trigger point for an acceleration to the downside. The May futures contract is trading near $18.00 so this may be the next target for the June contract, once it becomes the front month futures contract.

Recovering $26.04 will indicate sellers are letting up or the short-covering is getting stronger.

Holding between $26.04 and $27.40 could indicate buyers are trying to build a support base.

Overtaking $27.40 and sustaining the rally could trigger an acceleration to the upside.