Crude Oil Price Update – Straddling Retracement Zone; Weakens Under $66.68, Strenghtens Over $67.20

U.S. West Texas Intermediate crude oil futures are down sharply on Monday as commodity fund managers liquidated positions for a third straight session after official data showed refining throughput and economic activity slowed in China, an indication that COVID-19 outbreaks are crimping the world’s second-largest economy.

At 15:05 GMT, October WTI crude oil is trading $66.59, down $1.62 or -2.38%.

In other news, money managers reduced their net-long U.S. crude futures and options holdings in the week to August 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Speculators also cut their futures and options positions in New York and London by 21,777 contracts to 283,601 over the period, the CFTC said.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $65.00 will reaffirm the downtrend. A move through $69.39 will change the main trend to up.

The minor range is $65.00 to $69.39. The market is currently straddling its retracement zone at $67.20 to $66.68.

On the upside, resistance comes in at $69.26 to $70.27.

On the downside, the key support zone is $65.51 to $63.32. This zone stopped the selling at $65.00 on August 9 and at $64.49 on July 20. This zone is also controlling the near-term direction of the market.

Daily Swing Chart Technical Forecast

The direction of the October WTI crude oil futures contract into the close on Monday is likely to be determined by trader reaction to $67.20 and $66.68.

Bearish Scenario

A sustained move under $66.68 will indicate the presence of sellers. The first downside target is the main 50% level at $65.51, followed closely by a pair of main bottoms at $65.00 and $64.49. If $64.49 fails to hold then look for the selling to possibly extend into the Fibonacci level at $63.32.

Bullish Scenario

A sustained move over $67.20 will signal the presence of buyers. If this move creates enough upside momentum then look for a rally into $67.45. Since the main trend is down, sellers could come in on the first test of this level. Overtaking it, however, could trigger an acceleration to the upside with the next target coming in at $69.26 to $69.39.