Crude Oil Price Update – Trader Reaction to $50.23 will Determine Direction Today

November West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening and ahead of today’s U.S. Energy Information Administration’s weekly inventories report at 1430 GMT.

Traders expected the EIA report to show a draw of about 500,000 barrels. An unexpected build will be bearish for prices. The American Petroleum Institute’s weekly inventories report on crude oil showed a draw of 4.079million barrels, compared to analyst expectations for a draw of 756,000 barrels for the week-ending September 29.

However, crude oil prices fell after the API report showed gasoline inventories rose 4.19 million barrels for the week-ending September 29. This was against an expected build of only 1.088 million barrels.

Traders should pay close attention to today’s EIA gasoline inventories number. This could move the market.

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since September 28.

The main range is $47.59 to $52.86. Its retracement zone at $50.23 to $49.60 is currently being tested. This zone is controlling the near-term direction of the market.

The short-term range is $52.86 to $49.91. If the market builds support inside the main retracement zone, we could see a rally into the short-term retracement zone at $51.39 to $51.74.

Daily Forecast

Based on the current price at $50.29 and the earlier price action, the direction of the crude oil market today is likely to be determined by trader reaction to the main 50% level at $50.23.

A sustained move over $50.23 will signal the presence of buyers. This could trigger a rally into the steep downtrending angle at $50.86. This angle is the trigger point for an acceleration to the upside with $51.39 the next likely upside target.

A sustained move under $50.23 will indicate the presence of sellers. This will indicate the market is not ready to rally yet. The first targets are $49.91 then $49.80.

A break through $49.80 will indicate the selling is getting stronger with the next target angle coming in at $49.02.

Watch the price action and read the order flow at $50.23 all session.