Crude Oil Update – Prices Firm on Libyan Export Delay

March Crude Oil futures firmed in the early trade as investors reacted to news of a delay in Libyan exports and a weaker U.S. Dollar. The market has since retreated back to unchanged.

The issue with Libya is the key event today as I expect to see a choppy, two-sided trade in the dollar. The correlation between the dollar and crude hasn’t been that great lately anyway.

Anything that negatively affects Libya will be a plus for crude prices because it is one of the countries that has been granted an exemption from the OPEC production cuts.

Traders will also be watching to see if any more OPEC or non-OPEC members announce to customers their intentions to cut production. This news carried prices higher late last week.

Technical Analysis

The main trend is up according to the daily swing chart. The trend will turn down if $52.10 is taken out. A move through $56.24 will signal a resumption of the uptrend.

The short-term range is $56.24 to $52.10. Its retracement zone at $54.17 to $54.66 is the primary upside target. It was tested successfully earlier today. This zone is important to the longer-term structure of the market because bearish counter-trend traders are going to try to produce a secondary lower top on a test of this area. Bullish traders are going to try to take it out in an effort to make $52.10 a new main bottom.

The main range is $46.62 to $56.24. Its retracement zone is $51.43 to $50.29.

Forecast

Based on the current price at $53.80 and the earlier price action, the direction of March Crude Oil today will be based on trader reaction to the short-term 50% level at $54.17.

A sustained move under $54.17 will indicate the presence of sellers. The first target is a long-term uptrending angle at $53.62. This is followed by a pair of short-term uptrending angles at $53.10 and $52.60. The latter is the last potential support angle before the $52.10 main bottom.

A sustained move over $54.17 will signal the presence of buyers. This is followed by $54.66 and $54.99. Taking out $54.99 could trigger an acceleration to the upside with potential targets at $55.62 and $55.93.

Watch the price action and read the order flow at $54.17 today. Trader reaction to this price will tell us if the buying is getting stronger or if the sellers are gaining control.

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