Crude Oil Forecast: WTI Fills Gap, Positioned to Grind Lower

The failure to reach an agreement to freeze crude oil output levels for key producers caused prices to slide in early trading Monday. June WTI gapped down from Friday’s $41.19 low and met crucial support at $39.0. However, the labor strike in Kuwait, which has decreased the nation’s output by nearly 60 percent for the second straight day, lent support to the market. June WTI rose to $41.66 and settled at $41.19 on Monday.

The bounce to $41.66 filled the gap and fulfilled the 1.00 projection of the wave $39.0 – 40.92 – 39.81. The move up may gather some strength from the strike in Kuwait and extend a bit higher on Tuesday. However, from a technical standpoint, the move up from $39.0 was not unusual. Gaps are usually filled, and as stated, the move up from $39.0 has already met technical resistance near $41.66.

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Without support from bullish fundamentals or further random events (such as the strike in Kuwait), we expect prices to grind their way lower to support at $40.6 and $40.0 over the next few days. $39.0 remains key, and a close below this would open the way for major support in the mid $30s.

That said, a close over $41.7 would call for $42.5 and possibly $42.9. At this point, we don’t expect to see prices rise above $42.9.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is 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.

Published by

Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

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