Crude Oil Price Update – Trend Changed to Up; First Target $57.41

U.S. West Texas Intermediate crude oil futures are trading higher on Thursday for a number of reasons. These reasons include a larger-than-expected draw in U.S. stockpiles and a weaker U.S. Dollar. Both affect the demand side of the equation. On the supply side, OPEC and its allies are expected to extend the program to cut production, trim excess inventory and stabilize prices. Additionally, escalating tensions in the Middle East after Iran shot down a U.S. drone are raising concerns over a possible supply disruption.

At 12:05 GMT, August WTI crude oil futures are trading $55.84, up $1.87 or +3.46%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend turned up earlier in the session when buyers took out the swing top at $54.99. The uptrend is being supported by a pair of main bottoms at $50.98 and $50.79.

The main range is $64.03 to $50.79. Its retracement zone at $57.41 to $58.97 is the primary upside target. Short-sellers and profit-takers could show up on a test of this area.

Daily Technical Forecast

Based on the early upside action and the strong momentum, the direction of the August WTI crude oil market the rest of the session is likely to be determined by trader reaction to the uptrending Gann angle at $56.29.

Bullish Scenario

Overtaking and sustaining a rally over $56.29 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into the 50% level at $57.41. This is followed by a downtrending Gann angle at $58.53 and a Fibonacci level at $58.97.

Bearish Scenario

The inability to overcome $56.29 will not be bearish per se, but it will indicate the buying is getting weaker, or the selling is getting stronger. This could trigger a break back into the uptrending Gann angle at $53.54.

Since the main trend is up, buyers could come in on a test of $53.54, but if it fails then look for the selling to possibly extend into $52.17.

Overview

The breakout over $54.99 confirms the minor double-bottom. Simple analysis indicates that $59.19 is another potential upside target.