Crude Oil Price Update – Strengthens Over $46.43, Weakens Under $45.30

U.S. West Texas Intermediate crude oil futures are inching lower early Monday as a continued surge in coronavirus cases globally forced a series of renewed lockdowns, including strict new measures in Southern California in the United States, the world’s top oil consumer.

At 05:17 GMT, January WTI crude oil futures are trading $46.01, down $0.25 or -0.54%.

Coronavirus restrictive measures and lockdowns are not unique to the U.S. either. The southern German region of Bavaria announced on Sunday it would impose a tougher lockdown form Wednesday until January 5, while South Korean authorities heightened social distancing rules for the capital Seoul and surrounding areas that would last until the end of the month.

The early price action suggests that fear of lower future demand is outweighing last week’s OPEC+ decision to rollback its previously planned January production increases.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out a previous main top. A move through $46.68 will signal a resumption of the uptrend. The main trend will change to down on a move through $43.92.

The major resistance is a long-term Fibonacci level at $46.43.

The minor range is $43.92 to $46.68. Its 50% level at $45.30 is the first potential support.

The short-term range is $40.33 to $46.68. If the main trend changes to down then look for a pullback into its 50% level at $43.51.

The major support is a long-term 50% level at $42.57.

Daily Swing Chart Technical Forecast

The direction of the January WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the major Fibonacci level at $46.43.

Bearish Scenario

A sustained move under $46.43 will indicate the presence of sellers. The first downside target is the minor pivot at $45.30. If this level fails as support then look for the selling to possibly extend into the main bottom at $43.92, followed by a short-term 50% level at $43.51.

Bullish Scenario

A sustained move over $46.43 will signal the presence of buyers. Overtaking last week’s high at $46.68 will indicate the buying is getting stronger. If this move generates enough upside momentum then look for the rally to possibly extend into the March 3, 2020 main top at $48.88. A test of this level will indicate the market has essentially regained all of its COVID-19 loss.