Crude Oil Price Update – In Position to Challenge Major 50% Level at $59.63

U.S. West Texas Intermediate crude oil futures are trading higher on Thursday, helped by reports of tightening global supplies. The catalysts behind the market’s strength are the OPEC-led production cuts and the U.S.-led sanctions against Iran and Venezuela.

An unexpected plunge in U.S. crude oil inventories and production is also providing support. According to the U.S. Energy Information Administration, U.S. commercial crude inventories fell last week as refineries hiked output. U.S. oil production also fell by 100,000 barrels per day (bpd) to 12 million bpd.

At 13:54 GMT, May WTI crude oil futures are trading $58.88, up $0.29 or +0.49%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. Today’s earlier price action reaffirmed the uptrend. Since the market is testing a new high for the year, traders should watch for a potentially bearish closing price reversal top chart pattern. This won’t change the trend to down, but it could signal the start of a 2 to 3 day correction.

On the upside, the major target is the long-term 50% to 61.8% retracement zone at $59.63 to $63.45.

Daily Technical Forecast

Based on the early price action, the direction of the May WTI crude oil futures contract on Thursday is likely to be determined by trader reaction to the steep uptrending Gann angle at $58.87.

Bullish Scenario

Overtaking and sustaining a rally over $58.87 will indicate the presence of buyers. This could trigger a spike into the major 50% level at $59.63. Overcoming this level will indicate the buying is getting stronger.

Bearish Scenario

A sustained move under $58.87 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the next uptrending Gann angle at $56.87 over the near-term.