Crude Oil Price Update – OPEC Decision Could Drive Prices to $46.43 or $42.57

U.S. West Texas Intermediate crude oil futures are edging lower on Monday as nervous traders square positions ahead of a meeting of producer group OPEC+ to decide whether to extend large output cuts to balance global markets. Underpinning prices, however, are the hopes for an effective COVID-19 vaccine that could help improve future demand.

At 06:38 GMT, January WTI crude oil futures are trading $44.56, down $0.97 or -2.13%.

Traders expect OPEC+ to delay next year’s planned increase in oil output as a second COVID-19 wave has hit global fuel demand. This is potentially bullish news, but many traders believe the news has been built into the market for weeks so gains could be limited.

A lack of extension would be bearish news and could knock $5.00 a barrel off current prices according to some estimates.

 

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $46.26 will signal a resumption of the uptrend. The main trend will change to down if sellers take out the last swing bottom at $40.33.

The main range is $58.92 to $26.22. The market is currently trading inside its retracement zone at $42.57 to $46.43. This zone is controlling the longer-term direction of the futures contract.

The short-term range is $40.33 to $46.26. Its retracement zone at $43.30 to $42.60 is the next potential downside target.

The best support is the short-term 61.8%/long-term 50% combination at $42.60 to $42.57.

Daily Swing Chart Technical Forecast

The market is currently trading in the middle of the main retracement zone. This means that momentum will dictate the direction of the next move.

If the downside momentum continues then look for a drive into $43.30, followed by the support cluster at $42.60 – $42.57.

If the upside momentum resumes then look for a rally into $46.26, followed by $46.43. The latter is a potential trigger point for an acceleration to the upside.

For a look at all of today’s economic events, check out our economic calendar.