Crude Oil Price Update – Strengthens Over $40.08, Weakens Under $39.48

U.S. West Texas Intermediate crude oil futures are trading lower late Wednesday, pressured by a disappointing government inventories report. However, the market remained underpinned by supply concerns because of a strike in Norway. These events are helping to produce an inside trading range.

At 17:52 GMT, December WTI crude oil is trading $39.69, down $1.24 or -3.03%.

U.S. crude oil stockpiles rose modestly, in line with expectations, while gasoline and distillate inventories dipped last week, the Energy Information Administration said on Wednesday.

Crude inventories rose by 501,000 barrels in the week to October 2 to 492.9 million barrels, compared with analysts’ expectations in a Reuters poll for a 294,000-barrel rise.

U.S. gasoline stocks fell by 1.4 million barrels in the week to 226.80 million barrels, their lowest since November of last year, compared with expectations for a 471,000-barrel drop.

Distillate stockpiles fell by 962,000 barrels, in line with expectations.

Daily Swing Chart Technical Analysis

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

The market is currently caught between a series of retracement levels so don’t be surprised by a choppy, two-sided trade.

The short-term range is $44.33 to $36.93. Its retracement zone at $40.63 to $41.50 is resistance. This zone stopped the buying at $41.11 on Tuesday.

The first minor range is $42.02 to $36.93. The market is currently straddling its retracement zone at $40.08 to $39.48.

The second minor range is $36.93 to $41.11. Its retracement zone at $39.02 to $38.53 is the primary downside target.

Short-term Outlook

The price action on Wednesday suggests trader reaction to $40.08 to $39.48 will determine the next near-term move. But the presence of retracement zones indicates a move in either direction could be a labored event.

Bullish Scenario

A sustained move over $40.08 will indicate the presence of buyers. This could trigger a retest of $40.63 to $41.50.

Bearish Scenario

A sustained move under $39.48 will signal the presence of sellers. This could lead to a test of $39.02 to $38.53.

Side Notes

The price action this week suggests we could be in for another round of rangebound trading.