Crude Oil Technical Highlights:
- WTI crude continues to build a base, big rally could come soon
- Low to mid-90s could come in fairly short order
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December WTI crude oil futures posted a monster week a couple of weeks back that kicked off the notion that we had seen the worst of oil’s decline off the late-spring highs. Within the context of a longer-term uptrend the price action the past few months looks more corrective than like a reversal at this juncture.
Even if oil has peaked there is still good evidence that we could see another surge back towards the mid-90s soon. The pullback after the initial surge from the 70s was deep, but stopped around the point it needed to before the decline would start to look like the beginning of a new leg lower. If the low from last week holds, then the right shoulder of an inverse H&S pattern may have been cemented.
The bump higher the past few days has been marked by good price action with the past couple of sessions seeing early losses mostly or entirely erased. Today we are seeing oil try to come out of a short-term range. A break above 87.14 will have the 200-day at 89.61 and the unproven trend-line off the high in play.
A break back above the 200-day will likely see to it the high at 92.42 gets tested, and under the bottoming scenario likely broken. The 95s will be a solid test for oil as there are a couple of peaks that were created over the summer. For now, that appears to be in the cards in the relatively near future.
If we see oil turn back down and take out 81/80, then look for oil to continue to slide back to the September low at 75.70.
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—Written by Paul Robinson, Market Analyst
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