Crude Oil Price Update – Strengthens Over $41.50, Weakens Under $40.63

U.S. West Texas Intermediate crude oil futures are trading higher at the mid-session on output shutdowns in the Gulf of Mexico due to Hurricane Delta and potential supply disruptions in Norway.

Hurricane Delta began its march through prime U.S. offshore oil producing areas in the U.S. Gulf of Mexico on Thursday as energy companies moved drilling rigs and pulled workers off platforms.

The storm, expected to intensify over the Gulf’s warm waters to a Category 3 hurricane with winds of 115 miles per hour (185 kmh), has halted 80% of the region’s offshore oil and nearly 50% of its natural gas output.

At 14:55 GMT, December crude oil is trading $41.05, up $0.82 or +2.04%.

The market is also being supported by an escalating strike in Norway that threatens to reduce supply significantly and prospects for a new U.S. economic stimulus package to combat fallout from the COVID-19 pandemic.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the early price action has put the market in a position to challenge the main top at $42.02. A trade through this level will change the main trend to up. A move through $36.93 will signal a resumption of the downtrend.

The short-term range is $44.33 to $36.93. The market is currently testing its retracement zone at $40.63 to $41.50. Trader reaction to this zone will determine the next near-term move.

The minor range is $42.02 to $36.93. Its retracement zone at $40.08 to $39.48 is support.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the December WTI crude oil market is likely to be determined by trader reaction to $40.63 to $41.50.

Bullish Scenario

A sustained move over $41.50 will indicate the presence of buyers. This could trigger a rally into the main top at $42.02. This is a potential trigger point for an acceleration to the upside with $44.33 the next likely upside target.

Bearish Scenario

A sustained move under $41.50 will signal the presence of sellers. This could trigger a labored break into retracement levels at $40.63, $40.08 and $39.48.