Crude Oil Price Update – Testing Short-Term Retracement Zone at $64.88 to $64.47
U.S. West Texas Intermediate crude oil futures retreated for a second session as investors continued to accept that the perceived shortage from the increased sanctions against Iran would likely be absorbed by Saudi Arabia and other OPEC allies. Experts estimate that there would be about a 1 million barrel per day shortfall to fill.
At 18:57 GMT, June WTI crude oil is trading $65.13, down $0.76 or -1.15%. Despite the weakness, the market is still holding on to its weekly gains.
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“Saudi Arabia and several of its allies have more replacement barrels than what would be lost from Iranian exports,” said Rystad’s head of oil research, Bjoernar Tonhaugen. “Since October 2018, Saudi Arabia, Russia, the UAE, and Iraq have cut 1.3 million bpd, which is more than enough to compensate for the additional loss,” he added.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $66.60 will signal a resumption of the uptrend. The main trend will change to down on a move through $63.15.
The main range is $63.15 to $66.60. Its retracement zone is $64.88 to $64.47. The upper or 50% level of this range was tested successfully on Thursday. Since the main trend is up, buyers are expected to come in on a test of this area. They will be trying to produce a secondary higher bottom.
The major support is the long-term Fibonacci level at $63.48.
Daily Swing Chart Technical Forecast
The price action late in the session indicates that investors are respecting the retracement zone at $64.88 to $64.47.
We’re not too concerned about the upside since the trend is up and there is plenty of room to the upside with $70.04 the next major upside target.
On the downside, if $64.47 fails to hold then this will indicate the selling pressure is getting stronger. The first concern is last week’s close at $64.07. Taking out this level will put the market in a position to post a weekly closing price reversal top. This could lead to the start of a 2 to 3 week correction.
The next major support is the long-term Fibonacci level at $63.48. Taking out this level will likely lead to a change in trend.