Crude Oil Price Forecast: September Support In Focus On TL Failure

Talking Points:

Today’s EIA report of drop in inventory of 1.9 Million bbls was not enough to give crude oil a lasting bid. Shortly after the inventories print, oil rose toward the 3 week trendline resistance around $47.17 but was unable to hold. This move took other linked markets like USDCAD higher along with USD/EMFX aggressively moving higher on the week signaling USD strength which isn’t favorable for long-term Oil prospects.

The technical outlook for crude oil is highly dependent on the technical level of $43.60 holding. A break below there would put pressure on the September monthly opening range low breaking at $43.19. Currently, a break above $47.69, the September 17th high is need to turn the short-term outlook bullish. Longer-term resistance focus remains on the August 31st high of $49.30/49 per barrel should a breakdown in the USD develop alongside a break above $47.69.

Short-term traders can look for a bounce off support of the September low at $43 for a tactical play higher. However, a stop and reverse play may be appropriate as a large break higher in USD could turn our focus back toward new 6-year lows in a hurry. Currently, emerging markets are not providing a positive backdrop story to encourage demand picking up anytime soon. The Caixin China PMI hit its lowest levels since March 2009 on September 23rd, which is indicative of the larger demand drop and a break of $43 will turn the focus on oil definitively lower. T.Y.

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