Crude Oil Update – Prices Pressured by Increasing U.S. Production

April West Texas intermediate crude oil futures are trading lower shortly before the cash market opening. The market remains rangebound. Bullish traders have been supporting the market on breaks because they believe that total compliance with OPEC’s plan to cut output will eventually trim the excess supply. At the same time, any rallies have been capped by concerns over rising U.S. production.

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the short-term high was put in at $55.03 on February 21.

A trade through $55.03 will signal a resumption of the uptrend. A move through $53.12 will turn the main trend to down.

The main range is $56.92 to $51.86. Its retracement zone at $54.39 to $54.99 is the primary upside target. This zone stopped the rally last week when the market spiked into $55.03. Since then, it has acted like resistance.

The new short-term range is $51.86 to $55.03. Its retracement zone at $53.45 to $53.07 is the primary downside target.

Based on the current price at $53.89, the direction of the market the rest of the session is likely to be determined by trader reaction to the short-term uptrending angle at $54.00.

A sustained move under $54.00 will signal the presence of sellers. This could trigger a break into the next uptrending angle at $53.49 and the 50% level at $53.45.

If $53.45 fails as support then look for the selling to extend into $53.12 and $53.07.

A sustained move over $54.00 could trigger a rally into $54.39, followed closely be a long-term downtrending angle at $54.55. This is a possible trigger point for an acceleration into a cluster of potential resistance at $54.87, $55.11 and $54.99.

Watch the price action and read the order flow at $54.00 all session. Trader reaction to this angle will tell us if the bulls or the bears are in control.