Crude Oil Update – Prices Firm as Saudis Cut Exports to U.S.

May West Texas Intermediate Crude Oil is trading higher on Friday, but inside yesterday’s range. The news that Saudi Arabia is cutting exports to the United States is helping to underpin the market. However, the global supply glut is capping the upside.

Buyers came in early in the session after a report showed that Saudi Arabia’s crude exports to the United States in March would fall by around 300,000 barrels per day (bpd) from February, in line with OPEC’s agreement to reduce supply.

Later today, investors will get the opportunity to react to the latest rig count from Baker Hughes.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through $47.01 will signal a resumption of the downtrend. This may create enough downside momentum to challenge the November 14, 2016 main bottom at $45.78.

The main trend will turn up on a trade through the $50.14 main top.

The short-term range is $50.14 to $47.01. Its 50% level or pivot is $48.58. This price is controlling the short-term direction of the market.

If there is a breakout to the upside then look for a possible test of the major retracement zone at $50.26 to $51.52 over the near-term.

Forecast

Based on the current price at $48.01, the direction of the crude oil market today will be determined by trader reaction to the uptrending angle at $48.01.

A sustained move over $48.01 will signal the presence of buyers. This could drive the market into a potential resistance cluster at $48.57 to $48.58. This area is not only resistance but also the trigger point for an acceleration to the upside.  This could trigger an acceleration into the next downtrending angle at $49.57.

The inability to overcome $48.01 will indicate the presence of sellers. This could trigger a break into a pair of uptrending angles at $47.51 and $47.26. The latter is the last potential support angle before the $47.01 main bottom.