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James Hyerczyk
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WTI Crude Oil

U.S. West Texas Intermediate crude oil futures are trading sharply lower on renewed concerns over a weakening global economy and lower demand growth. Despite the announcement of a potentially bullish partial trade deal on Friday, called “phase one”, prices are falling because the deal is not likely to change the bearish demand picture.

At 14:13 GMT, December WTI crude oil futures are trading $53.32, down $1.46 or -2.67%.

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“Phase one” may have delayed the October 15 tariffs on China, but it did not reduce or eliminate the current tariffs. Furthermore, there are no guarantees that new tariffs won’t kick in on December 15.

Basically, investors dumped crude oil after they became more cautious that progress was being made towards a comprehensive U.S.-China trade deal. Furthermore, analysts said the partial deal between the two economic powerhouses appeared to lack substance with limited progress on structural issues such as technology transfers.

Daily December WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart. The market is in no position to change the main trend to up, but there is room for a normal 50% to 61.8% retracement. A trade through $50.89 will signal a resumption of the downtrend.

The minor trend is up. This is giving momentum a slight upside bias. A trade through $54.99 will signal the return of buyers. A trade though $51.40 will change the minor trend to down and shift momentum to the downside.

The short-term range is $59.11 to $50.89. Its retracement zone at $55.00 to $55.97 is resistance.

The minor range is $50.89 to $54.99. Its 50% level or pivot at $52.94 is potential support.

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Daily Technical Forecast

Based on the early price action and the current price at $53.32, the direction of the December WTI crude oil market the rest of the session on Monday is likely to be determined by trader reaction to the pivot at $52.94.

Bullish Scenario

A sustained move over $52.94 will indicate the presence of counter-trend buyers. The first upside target angle comes in at $54.39, followed by $54.99 and $55.00.

Bearish Scenario

If $52.94 fails as support then look for the selling to possibly extend into a pair of angles at $52.74 to $52.64.

Taking out $52.64 could trigger an acceleration to the downside with targets coming in at $51.77 and $51.40. The latter is the last potential support before the $50.89 main bottom.

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