Crude Oil Price Update – Surges Higher on Report Saudis Considering Deeper Cuts to Exports

September West Texas Intermediate crude oil futures are rebounding after early session weakness. Yesterday, it formed a potentially bearish closing price reversal top, but the inability to follow-through to the downside earlier today may have encouraged short-sellers to aggressively cover their positions.

Some traders are citing relatively balanced support and demand issues and a steep plunge in the U.S. Dollar as the main catalysts for today’s intraday rally. Crude oil is a dollar-denominated asset so it tends to attract foreign buyers when the Greenback weakens.

There is also some speculation that OPEC was considering further measures to support prices including deeper export reductions by Saudi Arabia which also underpinned prices.

Late in the session, investors will get the opportunity to react to weekly inventories data from the American Petroleum Institute.

Technical Analysis

The main trend is up according to the daily swing chart. Today’s rally through $47.08 negated the closing price reversal top and signaled a resumption of the uptrend. A trade through $47.45 will reaffirm the uptrend.

A major retracement zone comes in at $47.33 to $48.52. If the upside momentum continues then we should see a test of this zone today.

Swing chart analysis suggests that $49.01 is a possible upside target by Friday.

Forecast

Based on the current price at $47.06 and the earlier price action, the next upside target is the major 50% level at $47.33. This is followed by the main top at $47.45 and a downtrending angle at $47.87. This angle is the trigger point for an acceleration into the major Fibonacci level at $48.52.

The nearest downside targets are a pair of uptrending angles at $46.83 and $46.77. We could see a resumption of the selling if these angles fail as support.

Basically, look for the bullish tone to continue as long as the market holds above $46.77. Watch for surges to the upside if $47.45 and $47.87 are taken out with conviction.