Crude Oil Price Update – Weakens Under $57.27, Strengthens Over $57.35

U.S. West Texas Intermediate crude oil prices are trading lower on Thursday after the Fed dampened hopes of aggressive rate cuts into the end of the year, and as traders reacted to increasing supply and lower demand due to the weakening global economy.

Traders got the 25-basis point rate cut they were looking for on Wednesday, but their focus was on Fed guidance and central bank policymakers failed to indicate they would cut rates in September and December. In other news, the EIA reported another larger than expected drop in inventories, but it also said that U.S. output rebounded to 12.2 million barrels per day, up from 11.3 million barrels per day a week earlier.

In other news, ISM Manufacturing PMI hit 51.2 in July, lower than the 52.0 estimate. Construction Spending fell 1.3%, missing the 0.5% forecast. Both reports could lead to increased selling pressure.

At 14:05 GMT, September WTI crude oil futures are trading $57.04, down $1.54 or -2.65%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $54.85 will signal a resumption of the downtrend.

The minor trend is up. This is helping to generate short-term upside momentum despite today’s weakness.

On the upside, resistance is a series of retracement levels at $57.94, $58.41 and $58.66. The latter stopped the rally on Wednesday.

On the downside, the support zone target is $55.62 to $54.50.

Daily Technical Forecast

Based on the early price action, the direction of the September WTI crude oil market the rest of the session is likely to be determined by trader reaction to the pair of Gann angles at $57.27 and $57.35.

Bearish Scenario

A sustained move under $57.27 will indicate the presence of sellers. If this creates enough downside momentum then look for the move to possibly extend into a pair of uptrending Gann angles at $56.10 and $55.91.

Bullish Scenario

A sustained move over $57.35 will signal the presence of buyers. This could trigger a move into the 50% level at $57.94, followed by $58.41 and $58.66.