Crude Oil Price Update – Move Over $52.43 Resumes Rally, Move Under $51.43 Confirms Reversal Top

November West Texas Intermediate crude oil futures are trading flat shortly before the regular session opening as investors await the release of the U.S. Energy Information Administration weekly inventories report. Traders are looking for a build of 2.9 million barrels.

The EIA forecast could change before the report is released at 1430 GMT in reaction to yesterday’s American Petroleum Institute’s weekly inventories report which showed a draw of 761,000 barrels in U.S. crude inventories for the week ending September 22.

Gasoline inventories built for the first time in two weeks, by 1.470 million barrels for the week ending September 22, against an expected draw of 921,000 barrels.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, yesterday’s closing price reversal top indicates momentum may be getting ready to shift to the downside.

A trade through $51.43 will confirm the potentially bearish chart pattern. A move through $52.43 will negate the chart pattern and signal a resumption of the rally. This could lead to a test of the May 25 top at $52.62. This price is the trigger point for an extension of the rally.

The major retracement zone is $50.30 to $48.87. The short-term retracement zone is $50.01 to $49.44. If the reversal top is confirmed then these retracement levels will become the primary downside targets.

Daily Forecast

The current price at $51.90 puts crude oil in the middle of nowhere which means the next move will be event-driven.

Basically, a bullish EIA report is likely to create the upside momentum needed to challenge $52.43, $52.62 then a long-term downtrending angle at $53.12.

A bearish EIA report could generate the downside momentum needed to challenge a downtrending angle at $51.31. If this angle fails then look for the selling to extend into the uptrending angle at $50.64.

We could see a technical bounce on the first test of this angle but if it fails then look for the selling to extend into the retracement levels.