Crude Oil Price Update – Old Support at $38.99 to $39.57 Could Become New ResistanceAfter consolidating for most of September, the price action on Thursday suggests investors are getting ready to establish a new lower range.
U.S. West Texas Intermediate crude oil futures are down nearly 4% as we near the close on Thursday as rising coronavirus cases around the world dampened the demand outlook, and a rise in OPEC output last month also pressured prices.
At 20:45 GMT, December WTI crude oil futures are trading $38.98, down $1.49 or -3.68%. This is up from a low of $37.82 earlier in the session.
Standard Chartered analysts said they now expect global demand to fall 9.03 million bpd in 2020 and recover by 5.57 million bpd in 2021, leaving 2021 average slightly below the 2016 average.
Increasing oil supply from the Organization of the Petroleum Exporting Countries (OPEC) also weighed on the market, with output in September up 160,000 barrels per day (bpd) from August, a Reuters survey found.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $37.11 will signal a resumption of the downtrend. Taking out $42.02 will change the main trend to up.
The short-term range is $37.11 to $42.02. Its retracement zone at $38.99 to $39.57 could become new resistance.
The main range is $44.33 to $37.11. Its retracement zone at $40.72 to $41.57 is definitely resistance, having stopped the rally on Friday at $40.70.
After consolidating for most of September, the price action on Thursday suggests investors are getting ready to establish a new lower range. It all depends on how traders react to $38.99 to $39.57.
If prices continue to weaken toward $37.11 then look for a new lower top zone to be established at $38.99 to $39.57.
If buyers can nudge prices back over $39.57 then the market is likely to become rangebound again.
I don’t think we’re going to see prices collapse because the OPEC+ production cuts are in place, but if demand expectations continue to drift lower then resistance areas will continue to drop.
Essentially, the market will keep lowering the tops or resistance as long as the demand picture continues to weaken.