Crude Oil Price Forecast Talking Points:
- The ONE Thing: WTI has fallen to previously recognized support on the bad fundamental news for crude bulls as Trump’s administration has requested an increase in production. Traders should note that when the price hits support on bad news but fails to fall further, an opportunity may be developing. Keeping an eye on derivatives and futures contracts can help traders see if there is an opportunity in the direction of the longer-term trend or whether or broader reversal is in play.
- WTI Crude Oil Technical Analysis Strategy: A pull-back is in play with resistance favored between $65.80/68.50 per barrel. A break below $62 would open up a scene where deeper losses are favored on position unwinds.
- Access our recent Crude Oil & Macro Fundamental Forecast here
Key Technical Levels For WTI Crude Oil:
Resistance: $65.80-68.50 per barrel – May 28 spike low, 26-day midpoint per Ichimoku
Spot: $64.98/bbl
Support: $64.23- $62.00 per barrel –61.8% Fib extension from Wednesday’s high/ February high, April low
Market Update
Crude has fallen nearly 12% with the latest move lower generated from the news that the US has ‘quietly’ requested that the Saudis and other OPEC producers to hike production by some 1mm bpd. There remains little else aside from the non-verified headline. However, this makes the June 22 OPEC meeting all the more interesting.
Traders are continuing to watch the US Dollar, which continues to pull-back from YTD highs of 94.60, but remains above the 26-day midpoint of 92.84.
In other news, Central Asia’s largest oil producer, Kazakhstan is said to validate the view from Saudi Arabia and Russia to start scaling back the production curb program. Kazakhstan’s Energy Minister said in an interview that “the OPEC+ deal may be reconsidered toward softening” followed by “there is almost balance in the oil market.” All this points to a lack of tightness in the market that is likely concerning to bulls.
Daily NYMEX WTI –Unwind has reached identified support, next move important
Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT
After breaking lower from a rising wedge, WTI crude has now traded ~12% lower to multiple forms of support most notably, the Ichimoku Cloud.
The next zone of support in focus is appropriate, $62/bbl, the February high. A break lower, and it will likely be time to start considering short exposure after an aggressive run-up through 2016 and after June 2017.
Longer-term price support is expected at the closing highs in early 2017 of $54/bbl.
Unlock our Q2 18 forecast to learn what will drive trends for Crude Oil in a volatile Q2
Recommended Reading: 4 Effective Trading Indicators Every Trader Should Know
More for Your Trading:
Are you looking for longer-term analysis on Crude Oil and other popular markets? Our DailyFX Forecasts for Q2 have a section for each primary currency, and we also offer an excess of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our popular and free IG Client Sentiment Indicator.
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---Written by Tyler Yell, CMT
Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.
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