Crude Oil Price Update – Trend Down But Watch for Counter-Trend Buyers on Test of $36.50

U.S. West Texas Intermediate crude oil futures settled lower on Friday as rising global coronavirus cases threatened to put a dent in the global demand recovery and as the unsettled presidential election kept traders on edge. Diminishing prospects of a large U.S. stimulus package were also weighing on prices.

On Friday, December WTI crude oil settled at $37.14, down $1.65 or -4.25%.

In Europe, France reported record cases, intensifying concerns that additional lockdown in the continent could weigh on demand. U.S. coronavirus cases surged by over 120,000 on Thursday, according to a Reuters tally, the second consecutive daily record rise as the outbreak spreads in every region.

In the U.S., all eyes were on the U.S. presidential results as Democratic presidential candidate held a slim lead over President Donald Trump, but gained ground in a couple of states, edging closer to winning the White House as a handful of states continue to count votes.

Meanwhile, U.S. Senate Majority Leader Mitch McConnell said on Friday that the 1 percent drop in the U.S. employment rate indicates that Congress should enact a smaller coronavirus stimulus package that is highly targeted at the effects of the pandemic.

Despite these concerns, some bullish traders remain convinced that OPEC+ could delay bringing back 2 million barrels per day of supply in January, given weaker demand after new lockdowns.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is mixed. The main trend will change to up on a move through $41.90, while a move through $33.64 will signal a resumption of the downtrend.

The minor trend is also down. The minor trend will change to up on a trade through $39.35. This will shift momentum to the upside.

Earlier in the week, momentum briefly shifted to the upside with the formation of a closing price reversal bottom on November 2 then shifted back to the downside with the formation of a closing price reversal top on November 5.

The short-term range is $41.90 to $33.64. Its retracement zone at $37.77 to $38.74 is resistance. This zone was tested successfully last week.

The minor range is $33.64 to $39.35. Its 50% level at $36.50 is the next downside target.

Daily Swing Chart Technical Forecast

With the main trend down, the direction of the December WTI crude oil market on Monday is likely to be determined by trader reaction to the short-term 50% level at $37.77.

Bearish Scenario

A sustained move under $37.77 will indicate the presence of sellers. This could trigger a break into the minor 50% level at $36.50. Aggressive counter-trend buyers could come in on a test of this zone. They’re going to try to form a potentially bullish secondary higher bottom.

We could see an acceleration to the downside if $36.50 fails as support.

Bullish Scenario

A sustained move over $37.77 will signal the presence of buyers. This could create a labored rally with targets the Fibonacci level at $38.74, followed by the minor top at $39.35.