Crude Oil Price Update – Testing Retracement Zone; Weakens Under $68.26, Strengthens Over $69.79

U.S. West Texas Intermediate crude oil futures closed lower on Tuesday, pressured by a strong U.S. Dollar which reduced foreign demand for the dollar-denominated asset and concerns over weak demand in the United States and Asia. Losses were likely limited, however, by ongoing production outages on the U.S. Gulf Coast caused by Hurricane Ida the week before.

On Tuesday, October WTI crude oil futures settled at $68.35, down $0.94 or -1.36%.

Worries over demand in Asia were ignited by Saudi Arabia’s decision to cut the price for all crude grades sold to the continent by at least $1 a barrel. Disappointing U.S. jobs data on Friday also indicated the economic recovery may be stalling amid a resurgence in COVID-19 infections.

On a positive note, China’s crude oil imports rose 8% in August from a month earlier. In the Gulf of Mexico, around 79% of oil production remained shut, or 1.44 million barrels per day, a U.S. regulator said on Tuesday, more than a week after Ida hit.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $70.61 will signal a resumption of the uptrend. A move through $61.74 will change the main trend to down.

The minor trend is also up. A trade through $67.12 will change the minor trend to down. This will shift momentum to the downside.

The short-term range is $74.77 to $61.74. The market is currently testing its retracement zone at $68.26 to $69.79. This zone is potential resistance.

The minor range is $61.74 to $70.61. Its 50% level or pivot comes in at $66.68. Since the main trend is up, buyers are likely to come in on a test of this level.

The main retracement zone target and potential value area is $65.51 to $63.32.

Daily Swing Chart Technical Forecast

The direction of the October WTI crude oil market on Wednesday is likely to be determined by trader reaction to $68.26.

Bullish Scenario

A sustained move over $68.26 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into $69.79.

Overtaking $69.79 will indicate the buying is getting stronger. This could lead to a test of the minor top at $70.61.

Bearish Scenario

A sustained move under $68.26 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor bottom at $67.12, followed by the minor pivot at $66.68.

Look for buyers on the first test of $66.68. If this level fails then look for the selling pressure to possibly extend into $65.51 to $63.32.