Crude Oil Price Update – Strengthens Over $51.95, Weakens Under $50.99
U.S. West Texas Intermediate crude oil futures are inching higher on Thursday despite OPEC and IEA reports cutting demand forecasts for this year in reaction to the coronavirus outbreak in China, the world’s largest oil importer. Traders are also ignoring a much bigger than expected rise in U.S. crude oil inventories. The price action suggests investors are betting that Russia will finally agree with a recommendation from last week for an additional output cut of 600,000 barrels per day (bpd) by OPEC and its allies.
At 15:55 GMT, April WTI crude oil is at $51.47, up $0.06 or +0.10%.
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Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $52.34 will change the main trend to up. A move through the last two main bottoms at $49.63 and $49.50 will signal a resumption of the downtrend.
The short-term range is $52.34 to $49.63. Its 50% level at $50.00 is support.
The first intermediate range is $54.39 to $49.50. Its retracement zone at $51.95 to $52.52 is the first upside target.
The second intermediate range is $58.90 to $49.50. Its retracement zone at $54.20 to $55.31 is the second upside target.
Daily Technical Forecast
Based on the early trade and the current price at $51.47, the direction of the April WTI crude oil market the rest of the session on Thursday is likely to be determined by trader reaction to the 50% levels at $50.99 and $51.95.
Bullish Scenario
A sustained move over $51.95 will indicate the presence of buyers. The first upside target is the main top at $52.34, followed by a downtrending Gann angle at $52.49 and a Fibonacci level at $52.52.
The Fibonacci level is the trigger point for a potential breakout to the upside with the next target area $54.20 to $54.39.
Bearish Scenario
A sustained move under $50.99 will signal the presence of sellers. This could trigger a pullback into an uptrending Gann angle at $50.38, followed by a support cluster at $50.01 to $49.90.
Side Notes
Russia agreeing to the production cuts could be the catalyst that triggers a breakout over $52.34. If this creates enough upside momentum then we could see a test of at least $54.20.