Crude Oil Price Update – Downside Momentum Building with $76.22 and $75.25 Next Potential Targets

U.S. West Texas Intermediate crude oil futures are extending losses from the previous session on a Reuters report that the United States was asking major oil consumers like China and Japan to consider a coordinated release of oil reserves to lower prices.

At 07:08 GMT, January WTI crude oil futures are trading $76.98, down $0.57 or -0.74%.

Although traders are using the story as an excuse to exit long positions and possibly short the market, professionals are saying the move is not likely to lead to an increase in gasoline supply since many of the refineries are already maxed out.

In other news, U.S. crude stocks fell unexpectedly last week as refineries, enjoying strong margins due to higher fuel prices, ramped up output ahead of the winter heating season, the Energy Information Administration said on Wednesday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend changed to down on Wednesday when sellers took out the previous main bottom at $77.23. A move through $83.30 will change the main trend to up.

The minor trend is also down. A trade through $80.68 will change the minor trend to up. This will shift momentum to the upside.

On the downside, potential support comes in at $76.22 and $75.25. The latter is a potential trigger point for an acceleration with $72.30 the next potential target.

On the upside, potential resistance levels are layered at $78.09, $79.04 and $80.29. The latter is the last resistance before the minor top at $80.68.

Daily Swing Chart Technical Forecast

The direction of the January WTI crude oil market on Thursday is likely to be determined by trader reaction to $77.55.

Bearish Scenario

A sustained move under $77.55 will indicate the presence of sellers. Taking out the intraday low at $76.76 will indicate the selling pressure is getting stronger with the next target $76.22. Taking out this level could trigger a further decline into $75.25.

The 50% level at $75.25 is a potential trigger point for an acceleration to the downside with targets coming in at $74.25, followed by the support cluster at $72.36 – $72.30.

Bullish Scenario

A sustained move over $77.55 will signal the presence of buyers. This could trigger a labored short-covering rally into $78.09, $79.04 and $80.29. Since the main trend is down, sellers could re-emerge on a test of any of these levels.