Crude Oil Price Update – Testing Key Fibonacci Level at $41.57

U.S. West Texas Intermediate crude oil futures are surprisingly strong at the mid-session on Thursday despite the news that production has restarted in the Gulf of Mexico after Hurricane Sally made landfall on Wednesday.

Prices continue to find support after the U.S. Energy Information Administration (EIA) announced on Wednesday that U.S. crude stocks fell 4.4 million barrels last week to their lowest level since April. Traders had priced in a 1.3 million-barrel rise.

At 14:49 GMT, December WTI crude oil is trading $41.42, up $0.70 or +1.72%.

Prices were expected to be capped as the restarting of production was expected to drop about 500,000 barrels per day on the market. Meanwhile, an OPEC+ technical panel warned that a rise in coronavirus cases in some countries may curb oil demand despite signs of economic recovery and indications of a decline in oil stocks, according to an internal document seen by Reuters.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through $44.33 will change the main trend to up. A move through $37.11 will signal a resumption of the downtrend.

The short-term range is $44.33 to $37.11. Its retracement zone at $40.72 to $41.57 is the primary upside target. This zone is currently being tested.

The longer-term resistance is the 50% level at $42.41.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December WTI crude oil market into the close on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at $41.57.

Bearish Scenario

A sustained move under $41.57 will indicate that sellers came in to stop the rally. If this creates enough downside momentum then look for the selling to possibly extend into the 50% level at $40.72. This is a potential trigger point for an acceleration to the downside.

Bullish Scenario

Overtaking $41.57 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the major 50% level at $42.41.