Crude Oil Price Update – Trend Down, but Confirming Yesterday’s Reversal Shifts Momentum to Upside

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the cash market opening on Friday. There has been no follow-through to the upside following yesterday’s 2-percent gain.

At 1203 GMT, September WTI crude oil futures are trading $68.67, down $0.31 or -0.45%.

Yesterday’s rally was fueled by low-volume short-covering tied to expectations of a decline in inventory at the Cushing, Oklahoma delivery hub. Today’s weakness is being fueled by concerns over increased production and worries that China may slap sanctions on imported U.S. crude oil.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier in the week when sellers took out the last swing bottom at $67.56. However, momentum may be getting ready to shift to the upside following Thursday’s reversal bottom. A trade through $69.36 will confirm the chart pattern.

The main trend changes to up on a trade through $70.43. A move through $66.92 will signal a resumption of the downtrend. Taking out the main bottom at $66.29 will indicate the selling pressure is getting stronger.

The main range is $62.99 to $72.98. Its retracement zone at $67.99 to $66.81 is support. This zone is controlling the longer-term direction of the market.

The short-term range is $72.98 to $66.29. Its retracement zone at $69.64 to $70.42 is the first resistance zone. This zone stopped the rally earlier this week at $70.43.

This week’s range is $70.43 to $66.92. Its 50% level or pivot is $68.68. This price level appears to be controlling the direction of the market today.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the September WTI crude oil futures contract is likely to be determined by trader reaction to the pivot at $68.68.

A sustained move over $68.68 will indicate the presence of buyers. This move will gain momentum buyers can overtake yesterday’s high at $69.36. The next targets are $69.64, $70.42 and $70.43. The latter is the trigger point for an acceleration to the upside.

A sustained move under $68.68 will signal the presence of sellers. This could trigger a break back to $67.99.

Taking out $67.99 with rising volume could trigger an acceleration into $66.92, $66.81 and the main bottom at $66.29. This is a potential trigger point for an acceleration to the downside.