Crude Oil Price Update – Strengthens Over $39.34, Weakens Under $38.77

U.S. West Texas Intermediate crude oil futures are trading steady early Tuesday after dropping nearly 3% the previous session after supplies began to resume in Norway and the U.S. Gulf of Mexico and Libya resumed production at its largest oilfield.

At 04:47 GMT, December WTI crude oil settled at $39.77, up $0.04 or +0.10%.

The combination of increased supply and worries about further demand destruction due to a resurgence of COVID-19 infections in the U.S. Midwest and Europe is likely to keep a lid on prices. With prices expected to continue to feel downside pressure, some traders expect OPEC and its allies to slow its plan to gradually raise output.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $42.02 will change the main trend to up. A move through $36.93 will signal a resumption of the downtrend.

The minor trend is also down. The new minor top is $41.74. A trade through this level will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is $44.33 to $36.93. Its retracement zone at $40.63 to $41.50 is resistance. This zone is controlled the near-term direction of the market.

The minor range is $36.93 to $41.74. Its retracement zone at $39.34 to $38.77 is the primary downside target. Some aggressive counter-trend buyers could step in on a test of this area in an effort to form a secondary higher bottom.

Daily Swing Chart Technical Forecast

The direction of the December WTI crude oil market on Tuesday is likely to be determined by trader reaction to the 50% level at $40.63.

Bullish Scenario

A sustained move over $39.34 will signal the presence of counter-trend buyers. This could trigger a rebound rally into the short-term 50% level at $40.63.

Bearish Scenario

A sustained move under $39.34 will indicate the presence of sellers. This could trigger a break into the minor Fibonacci level at $38.77. Look for aggressive counter-trend buyers on the first test of this level, but if it fails then prepare for an acceleration to the downside with the main bottom at $36.93, the next potential downside target.