Crude Oil Price Update – Next Big Challenge for Buyers is $78.09 – $79.29

U.S. West Texas Intermediate crude oil futures finished slightly lower on Wednesday as hopes for a promising recovery faded into the close ahead of the U.S. Thanksgiving holiday. The catalysts behind the price action were uncertainty over the coordinated release of Strategic Reserve Petroleum from a U.S.-led consortium of countries, and worries over a new wave of COVID-19 cases in Europe. The U.S. government’s weekly inventories report offered no relief for bulls or bears with a mixed reading.

On Wednesday, January WTI crude oil futures settled at $78.39, down $0.11 or -0.14%.

According to the U.S. Energy Information Administration (EIA), U.S. crude oil stocks rose last week but gasoline and distillate stocks fell even as refining activity increased on strong overall fuel demand.

Crude inventories rose by 1 million barrels in the week to November 19, compared with analysts’ expectations for a decrease of 481,000 barrels. Gasoline stocks fell by 603,000 barrels, compared with analysts’ expectations in a Reuters poll for a 461,000-barrel drop. Stocks of gasoline are at their lowest since November 2017.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside following the confirmation of the closing price reversal bottom on November 22.

A trade through $74.76 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through $83.30 will change the main trend to up.

The minor trend is also down. A trade through $79.33 will change the minor trend to up. This will also confirm the shift in momentum.

The short-term range is $83.83 to $74.76. Its 50% level at $79.29 is potential resistance.

The minor range is $72.36 to $83.83. On Wednesday, the market closed slightly above its pivot at $78.09, making it support. Additional support is a pair of 50% levels at $76.22 and $75.25.

The main range is $60.77 to $83.83. Its retracement zone at $72.30 to $69.58 is the primary downside target and potential value area. Buyers may step in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the January WTI crude oil market early Friday is likely to be determined by trader reaction to $79.29 and $78.09.

Bullish Scenario

A sustained move over $79.29 will indicate the presence of buyers. Taking out the minor tops at $79.33 and $80.68 will indicate the buying is getting stronger. If this creates enough upside momentum then look for a surge into the pair of main tops at $83.30 and $83.83.

Bearish Scenario

A sustained move under $78.09 will signal the presence of sellers. This could trigger a sharp break into the pair of 50% levels at $76.22 and $75.25, followed closely by a pair of main bottoms at $74.76 and $74.25.

Taking out $74.25 will reaffirm the downtrend with the next major target $72.30 to $69.58.