Crude Oil Price Update – Closing Price Reversal Top Holding Market in Range

November West Texas Intermediate crude oil futures are giving back some of its gains from the previous session early Thursday. Due to the lack of follow-through to the upside, yesterday’s move appears to have been a knee-jerk reaction to a government report which showed a surprise draw in inventories.

On Wednesday, the U.S. Energy Information Administration’s weekly inventories report showed U.S. crude inventories fell 1.8 million barrels during the week ending September 22. Traders were looking for a 3.4 million-barrel build. Gasoline stocks showed an unexpected build while distillates fell by less than anticipated.

The current price action suggests investors are waiting for some definitive bullish news so they can take the market to the next level. This week, the news has given a mixed picture of supply and demand.

The bulls are singing the praises of increasing demand. They are hanging on to the latest International Energy Agency report that raised its global oil demand growth estimate to 1.6 million barrels per day (bpd) from 1.5 million bpd.

The bears are hoping for a rise in U.S. crude production now that prices have strengthened. The current EIA report showed U.S. crude production rose to 9.55 million bpd last week, higher than before Harvey hit the Texas Gulf Coast.

Bearish traders are also hoping that the high price of Brent crude oil encourages other major producers to increase production along with the U.S.

The clash between the bulls and the bears is helping to hold the market in a range. Unexpected bullish news should spike the market higher, but if there is no fresh news, WTI crude is likely to pullback into a value zone over the near-term.

Technical Analysis

The main trend is up according to the daily swing chart. However, Tuesday’s closing price reversal top has put the market in a holding pattern.

A trade through $52.43 will negate the chart pattern and signal a resumption of the uptrend. This could trigger a further rally into the May 25 main top at $52.62.

A move through $51.43 will confirm the closing price reversal top. This won’t change the main trend to down, but it could lead to a 2 to 3 day correction or a retracement of the last rally.

The main range is $47.59 to $52.43. If there is a correction then $50.01 to $49.44 will become the primary downside target.

Forecast

WTI crude oil is currently trading between support and resistance. This means that the next move will be guided by trader momentum.

Upside momentum will drive the market into $52.43 then $52.62. Overtaking $52.62 will likely lead to a test of the long-term downtrending angle at $53.11.

Downside momentum will likely take crude oil into a long-term downtrending angle at $51.27, followed by an uptrending angle at $50.89.

Look for a technical bounce on the first test of $50.89, but if it fails then watch for an acceleration to the downside.