Crude Oil Forecast: Crucial Resistance at $51.3

WTI crude oil has formed strong resistance between $50.82 and $50.88. This level has been challenged three times over the past few days and held. One might argue that this is a triple top. However, the decline from $50.88 has been extremely shallow and choppy indicating it is most likely corrective.

This afternoon’s move up from the $49.73 swing low calls for another attempt at $50.9 early tomorrow. A move above this would call for $51.3, a confluent wave projection that sits just above the 200-day moving average. The confluence and importance of $51.3 make it another potential stalling point. A close over $51.3 would call for $51.7 and $52.5.

Crude Oil Daily Wave Projections
Crude Oil Daily Wave Projections

That said, the daily Stochastic is overbought and the move up seems to be exhausted. Should prices fall below $49.6 before rising above $50.9, look for an extended correction to $48.9 and possibly lower before the move up continues to $51.3.

This is a brief analysis for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI crude oil still looks weaker than Brent and products after forming a star today and settling below Friday’s $48.28 midpoint. However, prices are poised to break higher out of a bullish ascending triangle and should meet the smaller than (0.618) target of the wave $47.0 – 48.44 – 47.84 at $48.7. A close above this would clear the way for the equal to (1.00) target at $49.3. This is an important objective because it is also in line with the smaller than target of the wave $45.58 – 49.42 – 47.0.

October 2017 WTI Crude Oil Kase Bar Chart
October 2017 WTI Crude Oil Kase Bar Chart

There is an outside chance the formation that makes up the ascending wedge is alternatively a double top at $48.44. To confirm the pattern prices would have to hold $48.44 and settle below the $47.84 swing low. This would then call for a test of the double top’s $47.2 target. Settling below $47.2 would call for the decline to extend to $46.8 and $46.4. The $46.4 level is most important because it is the smaller than target of the larger scale wave $50.51 – 45.58 – 49.42.

This is a brief analysis for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

October WTI crude oil could not settle above $49.2 resistance and is exhibiting signs of exhaustion. A pullback should take place soon, but at this point, there are no definitive technical factors that indicate the move up will stall before reaching $49.6 and possibly $50.0. A close over $50.0 would open the way for another test of $50.5, which then connects to $51.1 and higher.

Crude Oil Daily Candlesticks
Crude Oil Daily Candlesticks

Initial support is $48.6. A close below this would call for a larger downward correction to $48.0 and $47.4. Support at $48.0 is the 100-day moving average and the 38 percent retracement of the move up from $45.58. A normal correction should hold $48.0. Support at $47.4 is in line with the 50-day moving average and the 62 percent retracement of the move up from $45.58. Settling below $47.4 would be a strong indication the move up is over.

This is a brief analysis for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

October WTI crude oil continues to work its way toward crucial support at $45.6. Most importantly, this is the 62 percent retracement of the move up from $42.52 to $50.51. It is also a confluent projection for the waves down from $48.91, $48.5, and $48.2. A move below initial support at $46.1 will clear the way for $45.6.

CLV17 Daily Chart
CLV17 Daily Chart

The confluence of projections at $45.6 makes it a potential stalling point. However, today’s $46.44 settle was below the $46.5 smaller than (0.618) target of the larger scale wave $50.51 – 46.62 – 48.91. Therefore, this wave should ultimately extend to its $45.0 equal to (1.00) target. An upward correction will likely take place once $45.6 is met, but while the $48.91 swing low holds, odds will favor an eventual decline to $45.0.

That said, unstable external factors have crude and products on edge. Therefore, the move up from $45.76 this afternoon was likely short covering. Resistance at $46.9 should hold tomorrow. A move above this would call for a test of Monday’s $47.2 midpoint. Even so, unless WTI settles above $47.8, which splits the difference between Monday’s open and the 62 percent retracement of the decline from $48.91, the near-term outlook will remain negative.

This is a brief analysis for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI crude oil fell sharply last Thursday after OPEC and other major producers announced an extension to production cuts through March 2018. This was expected by most, and according to media, the decline was due to disappointment that production cuts were not deeper, which many had hoped for.

U.S. shale production remains a concern, though stockpiles fell for a seventh straight week, a fact that many have seemed to overlook. In addition, some are reportedly wondering what OPEC’s plan for an exit strategy to the production cuts will be without flooding the market with supply again.

For now, the extension of the OPEC cuts has become a game of “wait-and-see”. They will undoubtedly have a longer-term impact on prices, but at this point, it is hard to tell how significant the impact will be.

Most technical factors are negative, though it is still a tight call. July WTI made up some ground since falling late last week. However, the formation of a head and shoulders pattern is negative for the near-term outlook. The pattern’s neckline is $48.1, a close below which would open the way for the move down to continue toward its $44.65 target.

July 2017 WTI Crude Oil - 35-Cent Kase Bar Chart
July 2017 WTI Crude Oil – 35-Cent Kase Bar Chart

The connection to $48.1 is made through $49.1 and $48.6, the 0.618 and 1.00 projections of the wave $50.28 – 49.03 – 49.83. Tomorrow, we expect prices to test $49.1 and $48.6. A close below the lower objective would call for $48.1, the 1.382 projection, which is also near the 0.618 projection of the larger wave, $52.0 – 48.18 – 50.28.

That said, should prices rise above $50.3, near-term odds would shift in favor of $51.1 and possibly higher. The $50.3 level is the top of the head and shoulder’s right shoulder and the 0.618 projection of the wave $48.18 – 50.28 – 49.03. The 1.00 projection is $51.1. Therefore, a close above $50.3 would significantly damage the head and shoulders formation and the likelihood of a break below its $48.1 neckline.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Last Wednesday, June WTI broke higher out of the intraday bullish flag discussed in the crude oil forecast. The subsequent move up overcame the 0.618 and 1.00 projections of the wave $43.76 – 46.98 – 45.53. However, June stalled at $49.66 before meeting key resistance at $50.1. This is the confluence point between the 1.382 projection and the 62 percent retracement of the decline from $54.14 to $43.76.

Ultimately, June WTI should challenge $50.1. A sustained close over this would be a strong indication the larger scale move down is over, for now. However, bearish KaseCD and MACD divergences on the $0.50 Kase Bar chart call for a test of support first.

June WTI Crude Oil - $0.50 Kase Bar Chart
June WTI Crude Oil – $0.50 Kase Bar Chart

So far, the decline from $49.66 has been reasonably shallow and choppy, indicating it is most likely corrective of the move up. Today, June settled below the 0.618 projection of the wave $49.66 – 48.73 – 49.38 and met the 1.00 projection at $48.5. Meeting the 1.00 projection means the correction may already be complete. However, until prices rise above the $49.38 swing high, odds favor a deeper correction to $48.1 and possibly $47.1.

If the move up is going to continue to $50.1 this week, $47.1 must hold. This is the 62 percent retracement of the move up from $45.53 to $49.66. A close below $47.1 would call for a deeper test of support and possibly for June to challenge the crucial $45.53 swing low.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

The long-term outlook for WTI crude oil remains negative and it is too soon to state that a bottom has been made. However, last Friday, June WTI met major support at $43.76, the 1.00 projection of the wave $57.95 – 47.58 – 54.14 (exact projection was $43.77). This was also in the realm of the August 2016 swing low of $44.56 and the 62 percent retracement of the move up from $36.18 to $57.95 ($44.5). The confluence of support between $43.77 and $44.56 and the fact that this range has held on a closing basis favors a larger upward correction before the decline continues.

In addition to meeting support at $43.76, June WTI confirmed daily bullish divergences on the KaseCD and Stochastic and a bullish KasePO PeakOut (oversold signal). These signals call for the upward correction to extend. Most importantly, over the past two days, the pullback from $46.98 formed a bullish intraday flag, shown below on the $0.35 Kase Bar chart.

June 2017 WTI Crude Oil - $0.35 Kase Bar Chart
June 2017 WTI Crude Oil – $0.35 Kase Bar Chart

For now, according to Kase’s price forecasting model, odds are 65 percent for a break higher out of the flag. These odds will increase as prices rise toward the upper trendline of the flag at $46.6.

Important resistance at $47.6 should be challenged upon a break higher out of the flag. This is the confluence point between the 38 percent retracement of the decline from $54.14 to $43.76 and the 0.618 projection of the wave $43.76 – 46.98 – 45.53.

That said, there are some danger signs that indicate the flag, and other bullish technical factors, are on the teetering edge of failing.

The key to a break higher out of the flag and extended upward correction is holding support at $45.5. This is in line with the today’s $45.53 swing low and the flag’s lower trendline. A close below this would call for a test of $45.0, the 62 percent retracement of the move up from $43.76 to $46.98. Settling below $45.0 would shift near-term odds back in favor of testing the $43.76 low again.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary and intra-week updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

On Tuesday, crude oil prices continued to slip lower. Technical factors indicate June WTI’s corrective decline from $54.14 is poised to extend to at least $52.2. This is the 1.618 projection of the wave $54.14 – 53.14 – 53.8 and the 50-day moving average. A close below $52.2 would call for key near-term support at $51.6. This target is crucial because it’s the 38 percent retracement of the move from $47.58 to $54.14 and the 200-day moving average.

June 2017 WTI Crude Oil - $0.35 Kase Bar Chart
June 2017 WTI Crude Oil – $0.35 Kase Bar Chart

That said, a bullish KaseCD divergence on the $0.35 Kase Bar chart indicates another test of $52.2 and possibly $53.6 might take place first. Resistance at $53.6 is expected to hold. A close over this would call for $54.3. However, a sustained close over $54.0 is the key to a continued rise. This is the 62 percent retracement of the decline from $57.95 to $47.58.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary and intra-week updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Early Monday, crude oil prices were bolstered again after an announcement made by non-OPEC producers to cut 558,000 barrels per day. This comes after a commitment by OPEC to cut 1.2 million barrels per day. Reports indicate that such cuts will help to rebalance supply and demand by the first half of 2017. However, many market insiders remain skeptical that OPEC and other major producers such as Russia will stick to their agreements and quotas in coming months.

From a technical standpoint, January WTI gapped higher on Monday and met the 0.618 projection of the wave $34.55 – 53.72 – 42.43 at $54.51. This is an extremely important target. Waves that meet the 0.618 projection generally extend to their 1.00 projection, in this case, $61.6. It would likely take weeks, if not months, to reach $61.6. However, upon a sustained close over $54.5, the outlook for WTI would become much more bullish.

WTI Crude Oil

Due to the importance of $54.5, a correction is expected before prices rise much higher. So far, prices have fallen to $52.18 and formed a shooting star pattern on the daily chart. This is negative for the near-term and indicates the gap from $51.66 will most likely be filled within the next day or so.

A close below $51.66 would call for $50.1. This was resilient support last week and is the midpoint of December 1. For now, it looks as though prices will try and hold above $50.1 and will likely settle into a trading range between $50.1 and $54.5.

A close below $50.1 would open the way for $48.7 and $47.4. The lower of these two targets is most important support because it is the 62 percent retracement of the move up from $42.95 to $54.51. A sustained close below $47.4 is doubtful in the near-term but would be a strong indication that the move up is over.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary and intra-week updates are a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

Crude Oil rose substantially last week after OPEC agreed to cut output by 1.2 million barrels per day. The week posted the largest percentage gain since 2009 and many market participants reportedly expect the move up to continue.

However, others remain skeptical that OPEC members will comply with production quotas. Members have been known to cheat quotas in the past per media sources. In addition, pundits say higher prices would likely encourage more shale production in the U.S., which would ultimately offset OPEC cuts.

Most long-term technical factors are positive. However, WTI is starting to show signs of weakness for the near-term. January WTI’s move up stalled at $52.42 before prices could overcome the mid-October double top at $52.7. To reach the next target at $53.6 soon, January must overcome $52.7 early this week.

WTI Crude Oil

That said, the KaseCD momentum indicator is set up for bearish divergence and several momentum indicators confirmed bearish divergences on intra-day charts. Therefore, the correction from $52.42 will most likely extend to last Thursday’s $50.1 midpoint first. A close below $50.1 would then call for $49.5, which is the 38 percent retracement of the move up from $44.82 to $52.42.

Key support for the near-term is $49.1. A close below this would be a strong indication that without more help from external factors, the move up is over, for now.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary and intra-week updates are a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.