Crude Oil Price Update – Primary Downside Target, Best Support at $64.92 – $64.77

Crude oil futures plunged on Friday in reaction to reports that Russia, Saudi Arabia and other major non-OPEC producers are seriously considering increasing production to prevent the market from overheating.

July West Texas Crude Oil settled at $67.88, down $2.83 or -4.17%.

Helping to trigger the steep drop in prices was Russian Energy Minister Alexander Novak, who said a group of producer nations could soon begin easing production limits aimed at balancing the market.

“The moment is coming when we should consider assessing ways to exit the deal very seriously and gradually ease quotas on output cuts,” Novak said in televised comments, according to Reuters.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend changed to down when sellers took out the swing bottom at $70.24.

After trading on the strong side of a major retracement zone at $70.60 to $64.77 since May 14, the market has moved back into this zone, indicating a loss in momentum and the start of a possible long-term sideways trade.

Another range is $61.73 to $72.90. Its retracement zone at $67.32 to $66.00 is the next key target. Another retracement zone comes in at $64.92 to $63.03.

The combination of the retracement zones creates a potential support cluster at $64.92 to $64.77. This is the primary downside target. A test of this area is likely to attract buyers.

Daily Swing Chart Technical Forecast

Based on the downside momentum into the close on Friday, the direction of the crude oil market is likely to be determined by trader reaction to the 50% level at $67.32.

A sustained move over $67.32 will indicate the return of buyers. This could trigger a short-covering rally or a retracement of the break from $72.90.

A sustained move under $67.32 will signal the presence of sellers. This could trigger a labored break with potential targets at $66.77, $66.00, $65.38 and the potential support cluster at $64.92 to $64.77. Watch for a technical bounce on the first test of the support cluster.