U.S. West Texas Intermediate crude oil traded in a narrow range most of the week as traded shrugged off the weekly inventories data while waiting for a key OPEC and non-OPEC members meeting that would determine whether the current program to trim production would be extended or deepened.
November West Texas Intermediate crude oil futures settled the week at $50.66, up $0.22 or +0.44%.
As it turned out, the oil producing group reached no decision and may wait until January before deciding whether to extend their output curbs beyond the first quarter.
Russia’s energy minister said no decision was expected before January, although other ministers suggested such a decision could be taken before the end of this year.
“I believe that January is the earliest date when we can actually, credibly speak about the state of the market,” Russian Energy Minister Alexander Novak said. Other ministers suggested a decision could come this year.
In other news, oil services firm Baker Hughes reported that oil rigs operating in U.S. fields fell by 5 to a total of 744.
The fact that the OPEC and non-OPEC members failed to reach a decision wasn’t much of a surprise. Nonetheless, the market continued to be supported by stronger demand forecasts from OPEC and the International Energy Administration. Some bullish traders also believe the market is getting close to rebalancing.
Weekly Technical Analysis
The main trend is up according to the weekly swing chart. The trend turned up two weeks ago for the first time this year. If the upside momentum continues then look for a test of the next main top at $52.62. The main trend will turn back down on a trade through $46.14.
The main range is $58.37 to $42.80. Its retracement zone is $50.59 to $52.42. This zone was tested last week. This zone is very important to the longer-term structure of the market. Essentially, we are currently testing 50% for the year so a sustained move over $50.59 will be bullish and a sustained move under $50.59 will be bearish.
The short-term range is $46.14 to $51.11. Its retracement zone is $48.63. If buyers can’t overcome $50.59 then look for possible pullback into $48.63 to $48.04.
Based on last week’s close at $50.66 and last week’s price action, the direction of the November WTI crude oil market this week is likely to be determined by trader reaction to the major 50% level at $50.59.
A sustained move over $50.59 will indicate the presence of buyers. This will also indicate that investors are willing to buy strength. This move could generate the upside momentum needed to challenge the major Fibonacci level at $52.42 and the main top at $52.62. Look for an acceleration to the upside if this top is taken out with conviction.
A sustained move under $50.59 will signal the presence of sellers. This will indicate that investors would rather buy a pullback into support instead of strength. If the selling pressure persists then look for a possible correction into $48.63 to $48.04. Since the main trend is up, buyers are likely to come in on a test of this zone.
This article was originally posted on FX Empire
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc