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Crude Oil Price Update – Still Bearish but Short-Covering Rally Picking Up Traction

James Hyerczyk

U.S. West Texas Intermediate crude oil futures are trading higher at the mid-session, boosted by a few new concerns about supply and uncertainty ahead of trade talks between the United States and China. The uncertainty is likely contributing to the short-covering rally as traders are likely booking profits after a more than two week sell-off.

At 15:09 GMT, November WTI crude oil is trading $53.85, up $1.03 or 1.93%.

On the supply side, anti-government protests in Iraq are raising concerns over a potential oil production disruption. Additionally, the major Buzzard oil field in the British North Sea was also shut for pipe repair work, China’s CNOOC said on Friday. Finally, Libya’s National Oil Corporation (NOC) said on Sunday it would close Faregh oil field at Zueitina port for scheduled maintenance from Monday until October 14.

Daily November WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $50.99 will signal a resumption of the downtrend. The market is in no position to change the main trend to up, but there is room for a normal 50% to 61.8% retracement over the near-term.

The main range is $50.48 to $63.89. Its retracement zone at $55.60 to $57.19 is the first potential upside target.

Daily Technical Forecast

Based on the early price action and the current price at $53.85, the direction of the November WTI crude oil futures contract the rest of the session on Monday is likely to be determined by trader reaction to the uptrending Gann angle at $53.04.

Bullish Scenario

A sustained move over $53.04 will indicate the presence of buyers. If this continues to generate enough upside momentum, we could see a move into the short-term Fibonacci level at $55.60 and the downtrending Gann angle at $56.39 over the near-term.

Bearish Scenario

A sustained move under $53.04 will signal the presence of sellers. This could lead to a labored break with potential targets lined up at $51.99, $51.49 and $51.24. The latter is the last potential support angle before the $50.99 main bottom, followed by the August 7 bottom at $50.48.

This article was originally posted on FX Empire

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