Crude Oil Price Update – Sellers Hit Crude After Banks Issue Bearish Price Forecasts

August crude oil futures flipped yesterday’s potentially bullish closing price reversal bottom and are now trading lower shortly before the regular session opening.

The catalyst for the selling is a number of negative price forecasts. BNP Paribas cut its price forecast for Brent by $9 to $51 a barrel for 2017 and by $15 to $48 for 2018.

Barclays bank also cut its 2017 and 2018 Brent forecasts to $52 a barrel for both years from $55 and $57 respectively.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through $43.65 will negate the closing price reversal bottom and likely trigger an acceleration to the downside.

A trade through $44.91 will reaffirm yesterday’s closing price reversal bottom. This move would suggest the buying is greater than the selling at current price levels.

Forecast

The main range is $42.05 to $47.32. Its retracement zone is $44.69 to $44.06. The market is currently straddling this zone.

A sustained move under $44.06 will indicate the selling is getting stronger. This could trigger a break into the uptrending angle at $43.68 and the reversal bottom at $43.65. Look for an acceleration to the downside if $43.65 fails. The next target angle comes in at $42.86.

A sustained move over $44.06 will indicate that buyers are coming in on the weakness, but don’t expect a strong rally unless the buying is strong enough to overcome the 50% level at $44.69. This could trigger an acceleration into the downtrending angle at $45.32.

Look for a two-sided trade if crude oil remains inside $44.69 to $44.06. Look for a steep sell-off if $43.65 is taken out with conviction.