Crude Oil Price Update – Tight Trading Range Being Controlled by Major Retracement Zone at $37.50 to $41.56

U.S. West Texas Intermediate crude oil futures are inching higher on Friday in a lackluster trade. Despite Thursday’s reversal bottom and today’s early follow-through, the market is still in a position to finish lower for the week with gains capped by demand concerns and the possibility that U.S. producers will start ramping up production in July.

At 09:51 GMT, August WTI crude oil is trading $39.07, up $0.35 or +0.90%.

Some parts of the world are showing signs of a pickup in fuel demand, but buyers are reluctant to jump on board following these observations because of fears a spike in coronavirus infections in southern U.S. states could curtail the demand recovery.

Meanwhile, a new survey by the Dallas Federal Reserve Bank showed more than half of oil executives who cut production expect to resume some output by the end of July. This news is helping to keep a lid on prices early Friday.

Daily Swing Chart 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 June 23.

A trade through $41.63 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through $34.66.

The minor trend is down. Along with the confirmation of the closing price reversal top, this chart is also controlling the momentum.

The main range is $54.71 to $20.28. Its retracement zone at $37.50 to $41.56 is resistance. This zone is also controlling the longer-term direction of the market.

Inside the main retracement zone are a pair of minor 50% levels at $38.15 and $39.36. They are providing support and resistance, respectively.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $39.07, the direction of the August WTI crude oil market on Friday is likely to be determined by trader reaction to the pivot at $39.36.

Bullish Scenario

A sustained move over $39.36 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible surge into the resistance cluster at $41.56 to $41.63. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $39.36 will signal the presence of sellers. This could lead to a labored break with potential targets coming in at $38.15, $37.50 and $37.08. Taking out $37.08 could trigger an acceleration to the downside with the main bottom at $34.66 the next likely target.

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