Crude Oil Price Update – Weakens Under $41.39, Strengthens Over $42.01

U.S. West Texas Intermediate crude oil futures are trading slightly lower early Thursday after giving up earlier gains. The market is currently hovering near multi-week lows hit the previous session after U.S. government data showed gasoline demand fell and recovery from the COVID-19 pandemic was lagging.

At 06:08 GMT, October WTI crude oil is trading $41.42, down $0.09 or -0.22%.

The U.S. benchmark fell more than 2% on Wednesday, sliding to its lowest close in nearly four weeks. The catalyst behind the sell-off was a report from the U.S. Energy Information Administration (EIA) showing U.S. gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier.

Although crude oil inventories fell more than expected, investors shrugged off the number while attributing it to the production lost because of Hurricane Laura. Furthermore, analysts are now warning that the upcoming refinery maintenance and the end of summer driving season would also limit crude demand.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down when sellers took out the swing bottom at $41.46. It was reaffirmed when the selling extended through the 50% level at $41.39 and the minor bottom at $41.33.

Today’s session begins with the market on the weak side of the long-term 50% level at $42.01.

The short-term range is $39.00 to $43.78. Its retracement zone at $41.39 to $40.83 is currently being tested. If this zone fails as support then look for an acceleration to the downside.

Short-Term Outlook

Based on the early price action, the direction of the October WTI crude oil market on Thursday is likely to be determined by trader reaction to the short-term 50% level at $41.39.

Bearish Scenario

A sustained move under $41.39 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the short-term Fibonacci level at $40.83.

Taking out $40.83 with conviction could trigger an acceleration to the downside with the next major target the July 30 main bottom at $39.00.

Bullish Scenario

A sustained move over $41.39 will signal the presence of buyers. This could trigger a retest of the major 50% level at $42.01. Overcoming this level will indicate the buying is getting stronger, but the rally could stall at $42.51.