Crude Oil Price Forecast: Bearish Correction Deepens as Sellers Maintain Control

The bearish correction in crude oil hit new lows on Tuesday as sellers remained in control. At the time of this writing, the low for the day was $68.96 and it is on track to end the day in a weak position, in the lower third of the day’s trading range. Tuesday’s decline dropped through the 78.6% retracement level at $70.03 with little hesitation, putting crude in a position to test support at an interim swing low of $68.82. It was almost hit today. Shortly thereafter there is a short uptrend line across the bottom of a relatively recent consolidation zone.

Down by 14.6%

At today’s low, the price of crude oil had decreased by $11.80 or 14.6% from the recent swing high at $80.76. On a relative basis, that put it at the low end of bearish corrections that have occurred since the April 2024 peak. There were four corrections identified since then that ranged from a decline of 14.7% to 18.3%. These measured moves indicate that the current correction may be close to completing and that crude oil may have a little more to fall before the correction is complete.

Monthly Bearish Reversal Points to Lower Prices

Crude oil triggered a monthly bearish reversal earlier this month (not shown) and it continues to trade near the lows of the month. This shows aggressive selling with lower monthly support in a range from around $67.11 to $66.65. Given the decisiveness of the bearish retracement, these lower price levels may yet be tested before a notable bounce. There are three more trading days before the end of February, which means that crude is at risk of ending the month in a bearish position, near the lows of the month.

Nearing Key Price Levels

Although the lower trendline provides a potential support line, the next lower support zone is from $67.11 to $66.86. That range is determined by two previous interim swing lows that were established late last year. They represent a more significant support area since a drop below that price range more clearly indicates a possible continuation of the larger bear trend.

Since the $131.31 swing high in March 2022 crude oil has been in a downtrend with a series of lower swing highs and lower swing lows. However, a new lower swing low for the downtrend was attempted in September with a decline to $65.65. But that decline failed to fall below the earlier swing low at $63.67 from May 2023. The September support zone could be challenged if the $66.86 price area fails to hold as support.

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