Crude Oil Price Update – Trade Through $39.22 Confirms Reversal Bottom; $40.72 First Upside Target

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the release of the U.S. government inventories report at 15:00 GMT on Thursday, but edging toward the high of the session on the back of a weaker U.S. Dollar. The dollar is moving lower against a basket of major currencies after the Euro rallied in response to less-dovish comments from the European Central Bank (ECB).

At 13:38 GMT, December WTI crude oil futures are trading $38.74, down $0.13 or -0.33%. This is up from a low of $38.02.

At 15:00, the U.S. Energy Information Administration (EIA) will release its weekly inventories report. The EIA data is expected to show crude inventories fell by 500,000 barrels the week-ending September, according to analysts polled by S&P Global Platts. They also forecast a supply decline of 2.5 million barrels for gasoline and an inventory increase of 300,000 barrels in distillates.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum may be getting ready to trend higher, following the formation of the potentially bullish closing price reversal bottom on Wednesday.

A trade through $37.11 will negate the closing price reversal bottom and signal a resumption of the downtrend.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the December WTI crude oil futures market on Thursday is likely to be determined by trader reaction to yesterday’s high at $39.22.

Bullish Scenario

A sustained move over $39.22 will confirm the closing price reversal bottom. If this move creates enough upside momentum then look for the start of a 2 to 3 day counter-trend rally with the main objective the short-term retracement zone at $40.72 to $41.57.

Bearish Scenario

The inability to overcome or sustain a rally over $39.22 will signal the presence of sellers. The first target is a minor pivot at $38.05, followed by the closing price reversal bottom at $37.11.

If $37.11 fails as support then look for the break to possibly extend into the next main bottom at $35.72, followed by the main 50% level at $34.82.

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