Crude Oil Price Update – Weakens Under $79.04, Strengthens Over $80.53

U.S. West Texas Intermediate crude oil futures are edging lower early Monday, but the inside trading range suggests traders still haven’t decided which way they want to steer the market although there is a slight downside bias. The catalysts behind today’s early selling pressure are expectations of higher supplies and weakening demand.

At 07:33 GMT, January WTI crude oil futures are trading $79.02, down $0.67 or -0.84%.

One factor helping to put a lid on prices is last week’s strength in the U.S. Dollar, driven by expectations of an earlier than expected rate hike by the Fed. Another is speculation that President Joe Biden’s administration might release oil from the U.S. Strategic Petroleum Reserve (SPR) to cap prices.

Traders are also starting to price in a prediction from the Organization of the Petroleum Exporting Countries (OPEC) that called for world oil demand to drop in the fourth quarter by 330,000 barrels per day (bpd) from last month’s forecast.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower following the formation of a closing price reversal top on November 10.

A move through $77.23 will change the main trend to down. A move through $83.30 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor range is $83.83 to $77.23. Its 50% level at $80.53 is potential resistance.

The short-term range is $74.25 to $83.83. Its 50% level at $79.04 is potential support.

Additional support levels are layered at $78.09, $76.22 and $75.25.

The main range is $60.77 to $83.83. If the main trend changes to down then its retracement zone at $72.30 to $69.58 will become the primary downside target. This area, which is controlling the near-term direction of the market is also a value zone so look for new buyers on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the January WTI crude oil market on Monday is likely to be determined by trader reaction to $79.04.

Bullish Scenario

A sustained move over $79.04 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $80.53.

Overcoming $80.53 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with potential targets coming in at $83.30 and $83.83.

Bearish Scenario

A sustained move under $79.04 will signal the presence of sellers. The first target is $78.09, followed closely by the main bottom at $77.23.

Taking out $77.23 will change the main trend to down. This could trigger a further break into $76.22 and $75.25. The latter is a potential trigger point for an acceleration to the downside with $72.30 – $69.58 the next major target zone.