Monday’s Technical Outlook For WTI Crude Oil

$USO, $OIL

Crude Oil has been trading higher on speculation that there could be some “freeze” in production by the majors producers, Saudi Arabia, Russia and Iran. I believe that is remote, in fact very challenging.

The daily for WTI Crude Oil is looking Bullish after the US contract formed a double bottom reversal pattern around 26/27 in February. Since that pattern formed the action as been Bullish WTI Crude Oil and continue to remain so until the chart says differently.

WTI Crud Oil has broken out of its falling wedge on the weekly to the Northside and now is trading above the old resistance at 38.30.

The Bulls are aiming at the psych mark of 40 next, the previously support and converges with the 38.2% Fibo retracement against the May 2015 high.

But, WTI’s RSI indicator is approaching overbought, so watch out for a pullback in here the resistance is strong at 38/40 zone.

My short-term outlook will turn Bearish if WTI Crude Oil breaks back below the broken trend line and more so if Key support at 34.60 breaks down on a daily closing basis.

Until/Unless that happens though, the path of least resistance is to the Northside.

It is still possible that WTI Crude Oil could fall to as low as 20 bbl as the Organization of Petroleum Exporting Countries (OPEC) engages in a “Price War” with rival producers, testing who will cut output 1st. It has already shut out the high cost producers, driving some US operators into bankruptcy.

Iran has been slow to re-enter the market, but remember the nation still has about 53-M bbl in storagem and will be producing up to 1.5-M BPD in few months.

Long term technical and fundamental outlook for both Brent and WTI Crude Oil is South.

OPEC says it will cut production but is not doing that, and are going to see who can stand lower prices longest, since October of 2014.

I still see WTI C Crude Oil headed for 22 bbl mid-term.

Have a terrific week.

Paul Ebeling

HeffX-LTN