U.S. West Texas Intermediate crude oil futures are under pressure late Friday as mounting coronavirus cases globally raised demand concerns, although this week’s drawdown in U.S. crude stocks limited losses along with Saudi Arabia’s promise to cut output by a million barrels per day in February and March.
At 20:02 GMT, March WTI crude oil futures are trading $52.36, down $1.26 or -2.35%.
In other news, U.S. energy firms this week added oil and natural gas rigs for an eighth week in a row as crude prices recover to their highest in nearly a year. The oil and gas rig count, an early indicator of future output, rose 13 to 373 in the week to January 15, its highest since May, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of a closing price reversal top on Wednesday.
A trade through $53.94 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through $47.31.
The minor trend is down. It turned down when sellers took out $52.30 earlier today. The move confirmed the shift in momentum to down.
The minor range is $53.94 to $51.89. Its 50% level at $52.92 is potential resistance.
The short-term range is $47.31 to $53.94. Its 50% level at $50.63 is the nearest downside target and potential support. Since the main trend is up, buyers could come in on a test of this level.
The direction of the March WTI crude oil futures contract into the close will be determined by trader reaction to $52.92.
A sustained move under $52.92 will indicate the presence of sellers. If the selling is strong enough to take out the intraday low at $51.89 then look for a possible extension of the move into $50.63.
Recovering $52.92 will signal the presence of buyers. If this move is able to generate enough upside momentum then look for a test of $53.94.
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This article was originally posted on FX Empire