WTI Crude Oil Price Outlook: Pullback To Support, Can Bulls Hold?

CRUDE OIL PRICES BOUNCE

Crude oil prices have continued to show recovery so far in Q3, and this follows a bearish first couple of days to the fresh quarter after sellers posed a reaction at a very key resistance level. That resistance zone runs around the 60 psychological level, and this came into play in the last week of June while helping to hold the highs through the July open. After a quick bearish move stopped short of crossing the 56 level, buyers came back, helping to elicit a topside push back-above that vaulted area of 60 on the charts and soon creating a fresh seven-week-high.

Yesterday’s fresh seven-week-high has so far taken pause at a Fibonacci level of interest, as the price of 60.89 is the 23.6% retracement of the December-April major move.

WTI CRUDE OIL FOUR-HOUR PRICE CHART

(Click on image to enlarge)

wti crude oil four hour price chart

Chart prepared by James Stanley

STRENGTH DRIVEN BY SUPPLY FEARS WITH BREWING STORM IN THE GULF OF MEXICO

At the source of this recent bullish move has been a threatening weather formation brewing in the Gulf of Mexico. This week saw producers in the area cut production by more than one million barrels per day, or more than 53% of their output as Tropical Storm Barry bears down on the Louisiana coast. The storm is expected to make landfall on Saturday, which could further constrain production through next week, and this presents somewhat of a wild card to oil traders as it’s not yet possible to know just how much further disruption may be in the cards. Prospects for continued topside in crude oil prices appears to be at least somewhat linked to how aggressively this storm comes in.

From a technical perspective – the big question is whether that prior zone of resistance around the 60-handle can hold as support. This zone runs from the Fibonacci level at 59.64 up to the 60 level, and a hold of support here through next week’s open could keep the door open for short-term bullish strategies targeting the confluent zone that runs from 62.84-63.10.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.