Crude Oil Forecast: Bullish Pennant Calls for WTI to Break Higher

By Dean Rogers

After the late August rally WTI settled into a narrowing range that forms a pennant. This is a continuation pattern that indicates odds favor a break higher. However, these odds are somewhat dampened due to the price rise that took place before their formation was small in comparison to the size of the formation. In addition, more than half of the price rise has already been eroded.

wti crude oil

The small wave up from $43.71 indicates that a close over $46.0 would call for $47.0, which is in line with the top of the pennant.

We like support at $44.1 to hold, but $43.0, near the 62 percent retracement of the move up, is the key for a negative outlook.

On balance, even if prices break higher or lower out of the pennant, we could see crude oil continue to oscillate in a wider range for another few weeks while the market sorts out fundamental and geopolitical factors.

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, please sign up for a complimentary four week trial.