Crude Oil Price Update – Needs to Hold Above $42.01 to Sustain Upside Momentum

U.S. West Texas Intermediate crude oil futures are trading lower late in the session as a massive Category 4 hurricane in the Gulf of Mexico batters oil rigs and refineries in the area. Although production facilities are shut down, prices likely retreated because the storm surge was less than predicted, sparing inland plants from feared flooding. A prolonged shutdown due to refineries probably would have sent gasoline prices soaring.

At 19:31 GMT, October WTI crude oil futures are trading $42.93, down $0.46 or -1.06%.

“On the one hand refinery shutdowns reduced the demand for crude oil, but at the same time Gulf of Mexico production was shut in, nearly offsetting each other,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $43.78 will reaffirm the uptrend. The main trend will change to down on a move through $41.46 and $41.33.

A new minor top has formed at $43.78.

Short-Term Outlook

Despite today’s setback, October WTI crude oil futures remains bullish as long as it can hold above the major long-term 50% level at $42.01.

The major upside target is the Fibonacci level at $46.43.

If $42.01 fails as support then look for the selling to possibly extend into the bottoms at $41.46 and $41.33.

Taking out $41.46 will change the main trend to down, but $41.33 is actually the potential trigger point for an acceleration to the downside with $39.00 the best target.

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