Crude Oil Price Update – Headed to $57.95 to $56.13 Value Zone

U.S. West Texas Intermediate crude oil futures are trading sideways-to-lower early Friday as traders continue to react to the easing of tensions in the Middle East between the United States and China, and the unexpected build in U.S. crude oil inventories.

Let’s assume that this week’s events took out the war premium. This doesn’t make the market bearish per se. It only means the emphasis will shift back to the traditional supply and demand fundamentals, and they are leaning to the friendly side. They include potential demand growth due to the improving U.S.-China trade relations and the deeper production cuts by OPEC and its allies.

At 08:15 GMT, February WTI crude oil futures are trading $59.34, down $0.22 or -0.35%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It turned down earlier in the week when sellers took out the swing bottom at $60.63. A trade through $65.65 will change the main trend to up.

On January 8, the market posted a dramatic closing price reversal top. This chart pattern shifted momentum to the downside before the main trend changed to down.

The long-term range is $72.22 from October 3, 2018 to $45.60 from December 24, 2018. Its retracement zone at $58.91 to $62.05 is controlling the longer-term direction of the futures contract. The market is currently sitting inside this zone.

The short-term range is $50.24 to $65.65. Its retracement zone at $57.95 to $56.13 is the next potential downside target.

Daily Swing Chart Technical Forecast

I’d be surprised if crude oil plunged to the lower $50 area. But I won’t be surprised if it returns to $57.05 to $56.13, or the zone it spent a month in before traders started to put in the risk premium.

Look for buyers to step in on a test of $57.05 to $56.13. This zone looks like a value area.