Oil Trade Below Russia’s Desire $55-65 Range Even As US Output Stalls

Profit-taking behavior may explain the decline in net-short interest at oil prices approach the lower bounds of its recent range, but the ongoing tilt in retail position provides a contrarian view to crowd sentiment as traders bet on a larger recovery. With that said, the broader outlook for crude oil remains tilted to the downside as it snaps the upward trend from earlier this year, but the range-bound price action is likely to persist over the near-term as the Relative Strength Index (RSI) bounces back from oversold territory and clings to the bullish formation carried over from the previous month.

OIL DAILY CHART

(Click on image to enlarge)

Image of crude oil daily chart

  • Broader outlook for crude remains bearish as it snaps the upward trend from earlier this year, but the failed attempts to clear the $49.00 (38.2% expansion) to $49.50 (78.6% retracement) region may generate range-bound conditions, with near-term resistance coming in around $55.00 (61.8% expansion) to $55.40 (61.8% retracement) region.
  • Need a break/close above $55.00 (61.8% expansion) to $55.40 (61.8% retracement) to favor a larger rebound, with the next region of interest coming in around $59.00 (61.8% retracement) to $59.50 (50% retracement) followed by the former-support zone around $62.40 (23.6% expansion) to $63.60 (38.2% retracement).
  • Will keep a close eye on the Relative Strength Index (RSI) as it extends the bullish formation carried over from the previous month, but failure to preserve the upward trend may lead to a break/close below the $49.00 (38.2% expansion) to $49.50 (78.6% retracement) region, which opens up the 44.50 (78.6% retracement) to $45.30 (23.6% expansion) area.
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For more in-depth analysis, check out the Q4 Forecast for Oil

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