Crude Oil Price Update – Range Bound, but Traders Monitoring Tropical Storm

October West Texas Intermediate crude oil futures are trading lower on Thursday as bullish speculators bailed out of positions bought in anticipation of a production disruption due to tropical storm after Tropical Depression Harvey drifted into the Gulf of Mexico.

Traders are still monitoring the storm to see if it strengthens into a Category 1 hurricane by Friday. Additionally, they want to see where it is headed. There are reports that operators in the area are already closing down platforms and evacuating workers as a precaution.

CNBC is reporting that Royal Dutch Shell, Anadarko Petroleum and Exxon Mobil have all taken steps to curb some oil and gas output at platforms in the Gulf.

Aside from the weather, traders are reacting to another decline in U.S. commercial crude inventories, but gains are being limited by another rise in U.S. crude oil production.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been drifting lower since August 1. The market has been essentially range bound for two months.

A trade through $46.62 will change the main trend to down. A move through $48.91 will indicate the buying is getting stronger.

The main range is $50.51 to $46.62. Its retracement zone at $48.57 to $49.02 has been acting like resistance.

The short-term range is $46.62 to $48.91. Its retracement zone at $47.77 to $47.49 has been acting like support.

The major support zone is $46.52 to $45.57.

Forecast

Based on the early trade, the direction of the crude oil market today is likely to be determined by trader reaction to the downtrending angle at $48.39.

A sustained move under $48.39 will indicate the presence of sellers. This could lead to a test of the uptrending angle at $47.87, followed by the short-term retracement zone at $47.77 to $47.49.

Additional uptrending support angles come in at $47.25 and $46.31. The latter is the last potential support angle before the $46.62 main bottom.

Overtaking the angle at $48.39 will signal the presence of buyers. This could drive the market into the main retracement zone at $48.57 to $49.02. This is followed by a downtrending angle at $49.45.