Crude Oil Price Update – Plenty of Room to the Downside with $58.91 to $58.66 Key Target Zone

U.S. West Texas Intermediate crude oil futures tumbled on Friday, but still managed to close higher for the third consecutive week. Prices were boosted throughout the week by hopes of demand growth in 2020 due to the thawing of tensions between the United States and China.

Profit-taking ahead of the Christmas and New Year’s Day holidays likely weighed on prices on Friday. Additionally, a rise in the U.S. oil rig count, an indicator of future supply from the world’s largest producer, also put pressure on prices.

On Friday, February WTI crude oil settled at $60.44, down $0.74 or -1.21%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $61.40 will signal a resumption of the uptrend. The main trend will change to down on a move through $54.75.

The market is currently trading inside a major retracement zone at $58.91 to $62.05. This zone is controlling the longer-term direction of the market.

Another longer-term retracement zone and potential support area comes in at $57.06 to $58.66.

Combining these two zones makes $58.91 to $58.66 a potential support cluster. Look for buyers on a test of this area.

The short-term range is $54.75 to $61.40. Its 50% level at $58.08 is another potential downside target.

Daily Swing Chart Technical Forecast

Since the market didn’t form a closing price reversal top on Friday, any selling pressure is likely being fueled by long-liquidation or profit-taking. A closing price reversal top would have been indicative of aggressive short-selling along with profit-taking.

Since buyers are likely to be scarce this week due to the holiday-shortened week and the lack of fresh supply news until Friday, the selling could possibly extend into $58.91 to $58.66 over the near-term before buyers re-emerge.