Crude Oil Update – U.S. Output Offsetting OPEC’s Output Cuts

March West Texas Intermediate Crude Oil futures are trading lower as investors reacted to the strong recovery in U.S. oil drilling activity while downplaying the news that OPEC/Non-OPEC members were moving towards the output reduction goals they set in early December.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through $54.32 will turn the main trend to up. A move through $51.72 and $51.59 will signal a resumption of the downtrend.

The short-term range is $51.59 to $54.32. Its retracement zone is $52.96 to $52.63. This zone is controlling the near-term direction of the market. Currently, the market is trading on the weak side of this zone, giving it a downside bias.

The main range is $56.18 to $51.59. Its retracement zone at $53.89 to $54.43 is the primary upside target. Since the trend is down, we could see sellers come in on a test of this zone.

For longer-term traders, the best retracement zone target on the downside is $51.43 to $50.29.

Forecast

Based on the current price at $52.53 and the earlier price action, the direction of the market the rest of the session will be determined by trader reaction to the downtrending angle at $52.59.

A sustained move under $52.59 will signal the presence of sellers with the next target angle coming in at $52.09. This is the last potential support angle before the low at $51.72 and the main bottom at $51.59. This price is followed by the major 50% level at $51.43.

Overtaking $52.59 could create a labored rally with potential targets at $52.63, $52.93 and $52.96. The market begins to open up over $52.96 with the next potential target coming in at $53.89.

Look for the downside momentum to continue as long as the market remains under $52.59. Look for a choppy, labored trade if buyers overcome this price. Look for an acceleration to the upside if $52.96 is taken out with conviction.