Crude Oil Price Update – Pressured by Weak Compliance with OPEC Production Cut Plan

September West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening. Sellers hit the market after the Paris-based International Energy Agency (IEA) warned that a long-awaited market rebalancing could be delayed due to weak compliance with production cuts among OPEC members.

The sell-off erased earlier gains that were fueled by news of increased demand from China. Furthermore, investors are shrugging off potentially bullish news from the IEA which forecast a stronger outlook for global oil demand.

Technical Analysis

The main trend is up according to the daily swing chart. The uptrend will resume on a trade through $47.45. The main trend will change to down on a move through $43.83.

The main range is $52.38 to $42.27. Its retracement zone is $47.33 to $48.52. This zone stopped the rally last week at $47.45.

The intermediate range is $42.27 to $47.45. Its retracement zone at $44.86 to $44.25 provided support on Monday at $43.83.

The short-term range is $47.45 to $43.83. Its retracement zone at $45.64 to $46.07 is currently providing resistance. This zone is also controlling the intraday direction of the market.

Forecast

Based on the current price at $45.24 and the earlier price action, the direction of the crude oil market today is likely to be determined by trader reaction to the 50% level at $45.64.

A sustained move under $45.64 will indicate the presence of sellers. This could trigger further weakness into $44.86, followed by a support cluster at $44.25 to $44.15. If this area fails then look for a further break into $43.83. This is the trigger point for a steep drop into $43.21.

A sustained move over $45.64 will signal the presence of buyers. This could fuel a fast rally into $45.95 then $46.07.

Taking out $46.07 could trigger an acceleration into $46.70.  This is the last potential resistance angle before the $47.45 main top.