US Crude Oil Technical Forecast: Bullish
- OPEC+ output cuts provide catalyst for US crude bullish reversal
- Oil price action accelerates higher, approaching significant support at $93
- Technical posture lays the foundation for an longer-term bullish reversal with $93 and $100 remaining crucial to the outlook
of clients are net long. of clients are net short.
| Change in | Longs | Shorts | OI |
| Daily | 1% | 25% | 3% |
| Weekly | 61% | -28% | 43% |
OPEC+ Output Cuts Provide Catalyst for US Crude Bullish Reversal
US crude oil has put in a rather remarkable move to the upside since printing the low on September the 26th, albeit with help from OPEC+ and sources referring to larger future output cuts.
Oil prices are up nearly 20% from the low, the largest advance since March earlier this year. The move has also surged above the June trendline and the 61.8% Fibonacci retracement of the 2021 to 2022 major move ($88.40). It is not surprising to see oil advance as much as it has, since the commodity has steadily sold-off for most of H2 and required a fundamental shift (OPEC+ cutting output by 2 million bpd from November) to jolt it higher once again.
The chart below highlights recent OPEC+ developments and the resulting price action. At the time of writing, crude oil approaches the $93 level as the next level of support which is significant as it was the pre-invasion price and subsequently halted price declines in H1 and throughout the majority of July. Thereafter, the 50% Fib level of $96.44 comes into focus along with late August high of $97.66.
With Friday’s price action looking likely to end the day higher, that would mark 5 consecutive days of rises without a pullback. The RSI and MACD reveal that the market still has a fair distance to travel before breaching overbought levels, with momentum to the upside gaining traction. The $88.40 level corresponding with the 61.8% Fib retracement offers a potential level of support if we are to witness a pullback.
US Crude Oil (CL1!) Daily Chart
Source: TradingView, prepared by Richard Snow
The 4-hour chart actually reveals a bit of a pullback towards the June descending trendline before shooting higher after news of the OPEC+ output cuts. Therefore, price action over the short-term could very well continue to accelerate into the start of next week.
US Crude Oil (CL1!) 4-Hour Chart
Source: TradingView, prepared by Richard Snow
Recommended by Richard Snow
Get Your Free Oil Forecast
— Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX