Crude Oil Price Update – Supported by Drop in Rig Count, Capped by Increased OPEC Production
August West Texas Intermediate Crude Oil futures are trading slightly higher on Monday. This puts the market in a position to close higher for an eighth consecutive session. Bullish traders are being driven by a slight decline in the U.S. rig count. The market is being capped, however, by reports of increased production from OPEC. A stronger U.S. Dollar is also slowing down the buying.
Volume was light on Friday so it’s expected to be below average today too, ahead of Tuesday’s U.S. Fourth of July bank holiday.
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Technical Analysis
The main trend is up according to the daily swing chart. However, the market is up for the eighth day, putting crude oil in the window of time for a potentially bearish closing price reversal top.
The main range is $52.22 to $42.05. Its retracement zone at $47.14 to $48.34 is the primary upside target.
Forecast
Based on the current price at $46.31 and the earlier price action, the direction of crude oil today is likely to be determined by trader reaction to the steep uptrending angle at $46.05.
A sustained move over $46.05 will indicate the presence of buyers. This could create the upside momentum needed to challenge $47.14. Look for profit-taking on the first test of this level.
A sustained move under $45.05 will signal the presence of sellers. This could lead to a quick test of the downtrending angle at $45.72.
Crossing to the weak side of the angle at $45.72 will indicate the selling is getting stronger. The daily chart is open to the downside under this angle with the next targets coming in at $44.14 and $44.05.
Basically, look for a bullish tone on a sustained move over $46.05 and a bearish tone to develop on a sustained move under this angle.