U.S. West Texas Intermediate crude oil futures hit their highest level since August 2 on Monday as U.S. output remains slow to return two weeks after Hurricane Ida slammed into Gulf Coast production facilities and refineries. Meanwhile, fresh speculative buyers came in strong as another tropical storm approached the Texas coast, putting its output at risk.
At 20:20 GMT, December WTI crude oil is trading $69.99, up $0.86 or +1.24%.
The buying on Monday was strong enough to offset potentially bearish demand news. The Organization of the Petroleum Exporting Countries (OPEC) trimmed its world oil demand forecast for the last quarter of 2021 due to the Delta coronavirus variant.
OPEC said further oil demand recovery would be delayed until next year when consumption will exceed pre-pandemic rates, Reuters reported.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Monday when buyers took out the previous main top at $69.95. A trade through $67.04 will change the main trend to down.
The main range is $72.61 to $61.11. The market is currently trading on the strong side of its retracement zone at $68.22 to $66.86, making it new support.
The new short-term range is $61.11 to $69.95. If the main trend changes to down then look for a break into its retracement zone at $65.70 to $64.61.
Trader reaction to the former main top at $69.95 will set the early tone on Tuesday. If the buying is strong, then the market should continue to move towards the next upside target at $71.85, followed by the contract high at $72.61.
A sustained move under $69.95 will indicate the buying is getting weaker. If this move creates enough downside momentum then look for a pullback into the Fibonacci support at $68.22. Since the main trend is up, buyers are likely to come in on the first test of this level.
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