Crude Oil Price Update – Needs to Hold $42.62 to Sustain Upside Momentum

U.S. West Texas Intermediate crude oil futures are edging higher early Monday, with a strong performance in international-benchmark Brent crude oil helping to drag the U.S. benchmark higher.

The catalysts behind the early strength are support from global stimulus measures and better-than-expected China services sector data. Helping to put a lid on prices, however, is weak demand as it continues to struggle to return to pre-COVID levels in a well-supplied market.

At 07:00 GMT, October WTI crude oil is trading $43.28, up $0.31 or +0.72%.

The early price action also suggests that traders have largely shrugged off Hurricane Laura’s impact on Thursday/Friday as energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm struck.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through last week’s five-week high at $43.78 will signal a resumption of the uptrend. A trade through $41.46 will change the main trend to down.

October WTI crude oil is currently trading inside the year’s 50% to 61.8% zone at $42.01 to $46.43. Holding above $42.01 for nearly the entire month of August is helping to sustain the current upside bias.

The short-term range is $39.00 to $43.78. Its retracement zone at $41.39 to $40.83 is providing additional support.

Daily Swing Chart Technical Forecast

There’s a new minor range at $41.46 to $43.78. The price action the last three days suggests the short-term direction is being controlled by its pivot at $42.62.

Bullish Scenario

A sustained move over $42.62 on Monday will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the minor top at $43.78.

Last week’s high at $43.78 is a potential trigger point for an acceleration to the upside. The daily chart indicates there is plenty of room to the upside with $46.43 the next target. The only thing missing is a catalyst to launch the move.

Bearish Scenario

A sustained move under $42.62 will signal the presence of sellers. This could lead to a labored break with potential downside targets a series of levels at $42.01, $41.46, $41.39 and $41.33.

Bearish traders have to be careful shorting into the support zone. Furthermore, the recent price action suggests investors have grown comfortable buying dips.

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