Crude Oil Price Update – Strengthens Over $55.97, Weakens Under $55.74

West Texas Intermediate crude oil futures are inching lower on Thursday shortly after the regular session opening. The market is trading inside yesterday’s wide range, which suggests investor indecision and impending volatility.

On Wednesday, crude oil surged over 2 percent in reaction to an unexpected drawdown in the U.S. Energy Information Administration’s weekly inventories report.

Putting a lid on the market on Thursday are renewed concerns over demand due the headwinds facing the U.S. and global economies. However, the market is also being underpinned by expectations of additional output cuts by OPEC and its allies.

At 12:39 GMT, December WTI crude oil is trading $55.78, down $0.19 or -0.39%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. It turned up on Wednesday when buyers took out the last swing top at $54.99. The main trend will change to down on a trade through $52.46.

The minor trend is also up. A move through the minor bottom at $52.85 will change the minor trend to down. This will also shift momentum to the downside.

The intermediate range is $59.11 to $50.89. Its retracement zone at $55.00 to $55.97 is potential resistance. The market is currently trading inside this zone.

The main range is $62.74 to $50.89. Its retracement zone at $56.82 to $58.21 is the major upside target. Sellers could return on a test of this zone.

Daily Technical Forecast

Based on the early price action and the current price at $55.78, the direction of the December WTI crude oil the rest of the session on Thursday is likely to be determined by trader reaction to the downtrending Gann angle at $55.74 and the intermediate Fibonacci level at $55.97.

Bullish Scenario

A sustained move over $55.97 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the main 50% level at $56.82.

Bearish Scenario

The inability to take out $55.97 will indicate that sellers are coming in to stop the rally. Crossing to the weak side of the downtrending Gann angle at $55.74 will indicate the selling is getting stronger. This could trigger a break into the intermediate 50% level at $55.00, followed by an uptrending Gann angle at $54.64.

The selling pressure could begin to increase if $54.64 fails as support.