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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil futures eased on Thursday after posting a pair of volatile swings. The market started the session under pressure as new restrictions to stem a surge in COVID-19 infections dimmed the outlook for economic growth and fuel demand.

On Thursday, December WTI crude oil settled at $41.24, down $0.10 or -0.24%.

After the early sell-off, traders clawed back all of the earlier losses after the U.S. Energy Information Administration (EIA) reported an increase in U.S. petroleum demand last week that helped reduce crude stockpiles, while distillate inventories dropped by the most since 2003 as Hurricane Delta cut oil production and shut Gulf Coast refineries.

Daily December WTI Crude Oil

 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.

On the upside, the key resistance area is a retracement zone at $40.63 to $41.50. The market is currently trading inside this zone. It is controlling the near-term direction of the market.

On the downside, the key support area is a retracement zone at $39.34 to $38.77.


Short-Term Outlook

An equal dose of bullish and bearish news this week has pinned the market inside a trading range. Therefore, trader reaction to $40.63 on the downside and $41.50 on the upside should set the tone of the market over the near-term.

Bullish Scenario

Holding above $40.63 will be the first sign of buyers, but taking out $41.50 will signal the buying is getting stronger. A sustained move over this level could trigger rallies into $41.74 and $42.02. Taking out $42.02 will change the main trend to up, while overtaking $42.41 could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under $40.63 will signal the presence of sellers. This could trigger an acceleration to the downside into $39.34 to $38.77, much like Thursday’s price action.

For a look at all of today’s economic events, check out our economic calendar.

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