U.S. West Texas Intermediate crude oil is edging lower on Thursday as worries over fresh coronavirus lockdowns renewed concerns about demand for crude oil and fuel products, even as a huge container ship blocked crude oil carriers in the Suez Canal.
Traders realize that the lockdowns could lead to lower demand over weeks or months, while the supply concerns raised by the stranded container ship are likely to be short-term in nature.
Prices could plunge if the blocked ship is freed.
At 08:00 GMT, May WTI crude oil futures are trading $60.34, down $0.84 or -1.37%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $57.25 will signal a resumption of the downtrend. The main trend will change to up on a move through $66.44.
The main range is $51.37 to $67.79. Its retracement zone at $59.58 to $57.64 is controlling the near-term direction of the market. This zone stopped the selling at $57.25 on Tuesday.
The minor range is $66.44 to $57.25. Its 50% level at $61.85 is the first upside target.
The short-term range is $67.79 to $57.25. Its retracement zone at $62.52 to $63.76 is the primary upside target area.
Since the main trend is down, sellers could come in anywhere from $61.85 to $63.76.
Daily Swing Chart Technical Forecast
Since the market is moving against the trend, the direction on Thursday is likely to be determined by trader reaction to $59.58.
A sustained move over $59.58 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into $61.85. Sellers could come in on the first test of this level.
Overtaking $61.85 could lead to a test of $62.52 to $63.76. This is the best resistance area and potential trigger point for an acceleration to the upside.
A sustained move under $59.58 will put the crude oil market back inside the $59.58 to $57.64 retracement zone.
Taking out the Fibonacci level at $57.64 will put the market in a weak position. This could trigger the start of an acceleration to the downside with $51.37 the next potential downside target.
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