Crude Oil Price Update – Near-Term Strength Over $56.95, Weakness Under $55.72

U.S. West Texas Intermediate (WTI) crude oil markets are trading higher late Thursday, underpinned by a sharp drop in U.S. inventories during the week-ending August 23 as reported by the U.S. Energy Information Administration (EIA) on Wednesday and driven to just slightly below its August 21 top after China said earlier today it wished to resolve its protracted trade dispute with the world’s largest economy with a “calm” attitude. The news from China helped soothe investor concerns about demand growth at a time when many are worried about the possibility of a global recession.

At 17:31 GMT, October WTI crude oil futures are trading $56.55, up $0.77 or +1.34%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $57.13 will change the main trend to up. A move through $52.96 will signal a resumption of the downtrend.

The main range is $60.93 to $50.50. Its retracement zone appears to be controlling the near-term direction of the market. Crude oil is currently trading inside this range.

The short-term range is $50.50 to $57.40. Its retracement zone at $53.95 to $53.14 is support. This zone stopped the selling at $52.96 on August 26.

Daily Technical Forecast

Based on today’s price action and the current price at $56.55, the direction of the October WTI crude oil futures contract into the extended close is likely to be determined by trader reaction to the uptrending Gann angle at $55.96.

Bullish Scenario

A sustained move over $55.96 will indicate the presence of buyers. If they can create enough upside momentum then look for the rally to possibly extend into main Fibonacci level at $56.95. This is followed closely by the main top at $57.13.

Taking out $57.13 will change the main trend to up. Overcoming $57.40 will indicate the buying is getting stronger. This could lead to a test of the downtrending Gann angle at $57.55.

Bearish Scenario

A sustained move under $55.96 will signal the presence of sellers. This is followed by the main 50% level at $55.72. Taking out this level could trigger a steep break into a support cluster at $54.46.

Overview

A break under $55.78 will turn the market lower for the session. This will form a minor reversal top.