Crude Oil Price Update – Recovers to Close Higher After Testing Lower End of Range

James Hyerczyk
·2-min read

U.S. West Texas Intermediate Crude Oil futures rose on Wednesday after a government report showed a drop in U.S. crude oil and distillate stocks. Gains were limited, however, by a rise in gasoline stockpiles. The report also showed refiners picked up processing rates.

Traders said the bullish news that helped facilitate the drawdown was a rise in exports and a drop in imports. Net U.S. crude imports fell the week-ending September 25 by 536,000 barrels per day to 1.6 million bpd.

At 21:02 GMT, December WTI crude oil futures are trading $40.11, up $0.55 or 1.39%. This is up from a low of $38.95.

Wednesday’s price action indicates that traders want to keep the market in a trading range despite the previous session’s steep sell-off. Helping to generate support for the market is the OPEC+ production cuts, while coronavirus concerns continue to cap prices.

Daily December WTI Crude Oil
Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $37.11 will change the main trend to down. The main trend will change to up on a move through $42.02.

The main range is $44.33 to $37.11. Its retracement zone at $40.72 to $41.57 is providing resistance.

The short-term range is $37.11 to $42.02. Its retracement zone at $39.57 to $38.99 is generating the support.

Short-Term Forecast

As I mentioned earlier, Wednesday’s price action indicates investors are content with holding the market in a range. With OPEC+ underpinning the market, there seems to be no real fear of a washout to the downside so traders appear to be getting comfortable buying the dips.

Gains are being limited by a resurgence in COVID-19 cases, but the price action indicates investors are learning to adjust to expectations of lower demand. They seem to be content with holding prices in a range while awaiting the arrival of a successful coronavirus vaccine.

Support has clearly been established at $39.57 to $38.99. This is likely to hold over the near-term unless there is some kind of demand shock, or supply unexpectedly begins to rise.

Resistance is $40.72 to $41.57. This is expected to hold until there is another fiscal stimulus package, a vaccine is created, or there is a supply disruption because of war or a strike in Norway.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire