November West Texas Crude Oil futures are trading higher shortly after the regular session opening. Prices are rising after the International Energy Agency said the global oil surplus was starting to shrink due to robust global demand and an output drop from OPEC and other producers.
Traders are also reacting to yesterday’s American Petroleum Institute’s weekly inventories report which showed a build in crude oil and a drawdown in gasoline.
Today’s U.S. Energy Information Administration report is expected to show a crude oil build of 4.1 million barrels.
The main trend is up according to the daily swing chart. A trade through $49.84 will signal a resumption of the uptrend. This move may create the upside momentum needed to challenge the next main top at $50.62.
A trade through $47.59 will change the main trend to down.
The main range is $50.62 to $46.14. The market is trading on the strong side of its retracement zone at $48.91 to $48.38. This is helping to give the market a strong upside bias. Traders should treat the zone as support.
Based on the current price at $49.19, the direction of the market is likely to be determined by trader reaction to the Fibonacci level at $48.91.
A sustained move over $48.91 indicates the presence of buyers. If this creates enough upside momentum, we could see a rally into the major downtrending angle at $49.68. This is the last major resistance angle before the $49.84 and $50.62 main tops.
Breaking back under $48.91 will signal the presence of sellers. This will put the market back inside the major retracement zone with $48.38 the next downside target.
This article was originally posted on FX Empire
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