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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil futures are trading sharply higher late in the session on Monday. Despite some whipsaw price action earlier in the session, the market never turned lower and the tone was been firm all session. The price action indicates that speculators didn’t want to chase the market higher early in the session, but were willing to come in on the dip.

At 17:00 GMT, November WTI crude oil futures are trading $62.02, up $7.22 or +13.25%.

The fundamental reasons behind Monday’s trade are three-fold. The initial rally was fueled by a 5% drop in daily crude oil output due to a drone attack on a major Saudi oil facility. The intraday sell-off was the result of President Trump announcing he would open the Strategic Petroleum Reserve to make sure three was an amble supply of crude. The second rally is being driven by bullish traders betting on a prolonged outage since the Saudi’s still aren’t sure when production resumes, and concerns over a major supply disruption.

Weekly November WTI Crude Oil

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. The weekly trend turned up for the first time since late May on Monday when buyers took out the swing top at $60.77. A trade through $50.48 will change the main trend to down.

The main range is formed by the October 3, 2018 main top at $73.52 and the December 24, 2018 main bottom at $45.05. Its retracement zone at $59.29 to $62.64 is currently being tested. This zone is controlling the longer-term direction of the market.

The minor range is $45.05 to $65.23. Its retracement zone at $55.14 to $52.76 is support.


Weekly Technical Forecast

Based on Monday’s price action and the current price at $62.02, the direction of the November WTI crude oil market the rest of the week is likely to be determined by trader reaction to the Fibonacci level at $62.64.

Bullish Scenario

A sustained move over $62.64 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into the next main top at $65.23. This top is a potential trigger point for an acceleration to the upside with the next major target $73.52.

Bearish Scenario

A sustained move under $62.64 will signal the presence of sellers. This could trigger a break into the main 50% level at $59.29. This would change the trend, but it will indicate the presence of sellers.

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