Crude Oil Price Update – Trader Reaction to $89.77 Pivot Sets the Tone

U.S. West Texas Intermediate crude oil futures are edging lower early Friday after failing to follow-through to the upside, following a price surge the previous session.

The market is trading lower for the week but off a six-month low as traders continue to defend a long-term support.

Nonetheless, worries about a global economic slowdown continue to put a lid on any major rallies, while the market is attracting some buyers on forecasts calling for tighter supplies later in the year.

At 06:13 GMT, October WTI crude oil futures are trading $89.46, down $0.65 or -0.72%. On Thursday, the United States Oil Fund ETF (USO) settled at $74.24, up $2.19 or +3.04%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $85.37 will signal a resumption of the downtrend. A move through $94.17 will change the main trend to up.

The minor range is $94.17 to $85.37. The market is currently straddling its 50% level at $89.77.

On the downside, the major support is a long-term retracement zone at $88.26 to $81.85. This zone has stopped the selling three times over the past month including this week’s low at $85.37.

On the upside, the nearest resistance is the short-term retracement zone at $92.56 to $94.26.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $89.77 is likely to determine the direction of the October WTI futures contract on Friday.

Bullish Scenario

A sustained move over $89.77 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the short-term retracement zone at $92.56 to $94.26. The latter is a potential trigger point for an acceleration into $99.75 to $100.75.

Bearish Scenario

A sustained move under $89.77 will signal the presence of sellers. The first downside target is the long-term 50% level at $88.26. If this price level fails then look for the selling to possibly extend into this week’s low at $85.37.