Crude Oil Price Update – Could See Short-Covering Rally if $63.91 Holds as Support

U.S. crude oil prices plunged on Wednesday following a government report that showed a surprised jump in inventories when traders were looking for a drawdown. According to the U.S. Energy Information Administration, crude oil stocks rose by 6.8 million barrels. Traders were looking for a 2.6 million barrel decline.

October West Texas Intermediate Crude Oil settled at $64.34.

Traders said an unexpected rise in imports of more than 1 million barrels a day last week contributed to the gain as it offset record activity at U.S. refineries. Prices were also pressured by worries over an expected drop in demand due to a possible global economic slowdown.

Daily Technical Analysis

At the start of Thursday’s early trade, the main trend is down. The downtrend was reaffirmed early Wednesday after sellers took out the previous main bottom at $65.09. If the downside momentum continues then look for the selling to extend into the June 18 bottom at $62.60.

The main range is $62.60 to $71.29. The market is currently trading on the weak side of its retracement zone at $65.92 to $66.95, further confirming the bearish tone. These two levels are new resistance.

Daily Technical Forecast

Based on Wednesday’s price action, the direction of the October West Texas Intermediate crude oil market on Thursday is likely to be determined by trader reaction to the longer-term uptrending Gann angle at $63.91. This angle stopped the selling at $63.93 yesterday.

A sustained move over $63.91 will indicate the presence of counter-trend buyers. If this move creates enough upside momentum then look for a possible rally into another uptrending Gann angle at $67.85. Overcoming this angle will indicate the short-covering is getting stronger.

A failure to hold $63.91 will signal the presence of sellers. This will indicate the market is still being controlled by the trend traders. This move could extend into the next uptrending Gann angle at $63.26. This is the last potential support angle before the $62.60 main bottom.