Crude Oil Price Update – Direction Being Controlled by Short-Term Pivot at $51.84

U.S. West Texas Intermediate crude oil futures are drifting sideways to lower on Monday in a very limited trading range. Volume is well below average also as traders lack the incentive to move the market in either direction until Russia makes its decision about whether to go along with OPEC and its other allies to increase the amount of production cuts.

At 15:11 GMT, March WTI crude oil is trading $49.97, down $0.35 or -0.70%.

Last week, an OPEC committee advised the cartel and its allies to cut production an additional 600,000 barrels per day to offset the potential loss in demand from a slowdown in China’s economy due to the impact of the coronavirus.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $49.31 will signal a resumption of the downtrend. The main trend will change to up on a trade through $52.20.

The market is also straddling the former main bottom from October 3, 2019 at $50.18.

The short-term range is $54.37 to $49.31. Its 50% level or pivot at $51.84 is the nearest resistance.

Daily Technical Forecast

Based on the early price action and the current price at $49.97, the short-term direction of the March WTI crude oil futures contract is likely to be determined by trader reaction to the pivot at $51.84.

Bearish Scenario

A sustained move under $51.84 will continue to generate a strong downside bias. If this generates enough downside momentum then look for sellers to go after the main bottom at $49.31. Taking out this level will reaffirm the downtrend. This could trigger an acceleration to the downside with the next major target the December 24, 2018 main bottom at $45.76.

Bullish Scenario

Buyers could continue to come in above $49.31, but they really need to overcome $51.84 to show strength. This level is followed closely by the main top at $52.20.

Taking out $52.20 could trigger an acceleration to the upside with the next targets a resistance cluster at $52.77 and another main top at $54.37.

Side Notes

Russia’s decision to accept or reject the additional OPEC+ production cuts will be a major market moving event. If they accept the decision then look for buyers to go after $52.20. If they reject the plan then look for an acceleration to the downside under $49.31 with $45.76 the next potential target.