Crude Oil Price Update – Strengthens Over $45.27, Weakens Under $44.68

U.S. West Texas Intermediate crude oil is trading lower on Wednesday, pressured by heightened volatility and weakness in the U.S. stock market. The catalyst behind the selling pressure is weaker-than-expected manufacturing data from China, which raised concerns over future demand. Oil traders are also worried about rising U.S. production that could offset any gains from the OPEC-led production cuts, which began on January 1.

At 1446 GMT, February WTI crude oil is trading $44.59, down $0.82 or -1.81%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The market is in no position to change the main trend to up. However, a trade through $42.36 will signal a resumption of the downtrend.

The short-term range is $42.36 to $47.00. Its 50% level or pivot comes in at $44.68.

The main range is $54.77 to $42.36. Its retracement zone at $48.57 to $50.03 is resistance.

Daily Technical Forecast

Based on the early price action, the direction of the February WTI crude oil market is likely to be determined by trader reaction to the short-term pivot at $44.68.

Bullish Scenario

A sustained move over $44.68 will indicate the presence of buyers. The first upside target is a downtrending Gann angle at $45.27. This angle has been guiding the market lower since the $54.77 top on December 4.

Overcoming and sustaining a move over the angle at $54.77 will indicate the buying is getting stronger. If this move generates enough upside momentum then look for the rally to possibly extend into the minor high at $47.00.

Bearish Scenario

A sustained move under $44.68 will signal the presence of sellers. This could trigger an acceleration to the downside with the next major target the main bottom at $42.36. This is followed by the January 20, 2016 main bottom at $41.48.