Crude Oil Price Update – Strengthens Over $56.08, Weakens Under $55.82

U.S. West Texas Intermediate crude oil is trading higher as traders try to recover some of Friday’s steep losses. Traders are saying Friday’s sell-off was fueled by the announcement of the resignation of the Iraq prime minister in response to weeks of unrest and protests in the country. Traders fear that a new regime may lead to the lifting of sanctions against the country, leading to increased supply in the open market.

At 13:17 GMT, January WTI crude oil is at $56.25, up $1.08 or +1.94%.

Today’s rebound rally is being fueled partly by reports showing stronger-than-expected factory activity in China, and the possibility that OPEC and its allies may vote to make deeper production cuts at its December 5-6 meeting.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on November 22 at $58.74.

A trade through $54.85 will change the main trend to down. A move through $58.74 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. It changed to down on Friday, confirming the shift in momentum to the downside.

The main range is $61.48 to $50.69. Its retracement zone at $56.08 to $57.36 is controlling the near-term direction of the market.

The minor range is $54.85 to $58.74. Its 50% level at $56.80 is potential resistance.

The short-term range is $50.69 to $58.74. Its retracement zone at $54.72 to $53.77 is a potential downside target and support area.

Daily Technical Forecast

Based on the early price action and the current price at $56.25, the direction of the January WTI crude oil the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at $56.08 and the uptrending Gann angle at $55.82.

Bullish Scenario

A sustained move over $56.08 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into $56.80, followed by $57.36 then $58.11.

Bearish Scenario

A sustained move under $55.82 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the main target a support cluster at $54.85 to $54.72.