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Crude Oil Price Update – Headed to $15 unless Saudis and Russians End the Price War

The demand picture is bleak because of the rapidly spreading virus. The supply picture is about to get worse if Russia and Saudi Arabia follow-through with their threats to flood the market with oil after April 1. This is why we think the market could drop quickly to $15.00.
James Hyerczyk

U.S. West Texas Intermediate crude oil futures dipped below $20 per barrel early Monday on heightened fears that the global coronavirus shutdown could last months and demand for fuel could decline further.

The price of U.S. crude oil is now so low that it is becoming unprofitable for many oil firms to remain active, analysts said, and higher cost producers will have no choice but to shut production, especially since storage capacities are almost full.

At 10:04 GMT, May WTI crude oil is trading $20.61, down $0.90 or -4.23%.

Daily May WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out the March 18 main bottom at $20.52. A trade through $28.49 will change the main trend to up.

The minor trend is also down. A move through $25.24 will change the minor trend to up. This will also shift momentum to the upside.

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Daily Technical Forecast

Our next major downside target is the November 2001 main bottom at $19.44. We could see a technical bounce on the first test of this level.

If $19.44 is taken out with heavy volume, the market could plunge into the $15.00 psychological support level.

On the upside, the first resistance angle drops in at $22.49. The next downtrending Gann angle comes in at $23.70.

Taking out $23.70 will indicate the buying is getting stronger even if it is only short-covering. This could lead to a test of the minor top at $25.24. Momentum will shift on a move through this level with the $28.49 main top the next major upside target.

Side Notes

The demand picture is bleak because of the rapidly spreading virus. The supply picture is about to get worse if Russia and Saudi Arabia follow-through with their threats to flood the market with oil after April 1. This is why we think the market could drop quickly to $15.00.

Apparently, the Russians and Saudis aren’t talking so brace yourself for a spike lower. However, don’t get complacent playing the short side because there’s still time for the United States to intervene and convince the Saudis to call a truce with Russia.

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