Crude Oil Price Update – Weakens Under $40.83, Strengthens Over $41.39

U.S. West Texas Intermediate crude oil futures are trading lower early Friday, while trading inside yesterday’s wide range. Nothing has changed fundamentally so we expect the market to remain in the strong hands of the sellers. However, we wouldn’t be surprised by some position-squaring ahead of the long U.S. holiday weekend.

At 03:35 GMT, October WTI crude oil futures are trading $40.97, down $0.40 or -0.97%.

Oil prices fell on Thursday, at one point touching their lowest level since early August as U.S. unemployment data fed fears of a slow recovery for the economy and fuel demand a day after weak U.S. gasoline demand data.

WTI oil is also set to finish the week lower. Most of the loss can be attributed to a drop in domestic gasoline demand last week to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend changed to down on Wednesday when buyers took out the swing bottom at $41.46. A trade through yesterday’s low at $40.22 will reaffirm the downtrend. A trade through $43.78 will change the main trend to up, which is highly unlikely.

The short-term range is $39.00 to $43.78. The market is currently trading inside its retracement zone at $41.39 to $40.83. Yesterday’s price action and today’s early move suggests that this zone is controlling the near-term direction of the market.

On the upside, the major resistance is the long-term 50% level at $41.39.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $40.97, the direction of the October WTI crude oil market on Friday is likely to be determined by trader reaction to the short-term Fibonacci level at $40.83.

Bearish Scenario

A sustained move under $40.83 will indicate the presence of sellers. This could lead to a retest of Thursday’s low at $40.22. This price is also a potential trigger point for an acceleration to the downside with $39.00 the next likely downside target.

Bullish Scenario

A sustained move over $40.83 will signal the presence of buyers. However, this could lead to a labored rally with potential upside targets a pair of 50% levels at $41.39 and $42.01.