How Low Can It Go?WTI Crude Oil (October)
Last week's close: Settled at 73.55, down 2.36 on Friday and 1.28 on the week
Last Friday’s sharp sell-off in the Crude complex came on the heels of a Reuters report that stated OPEC+ was planning on moving ahead with production increases. Momentum in the Crude complex is currently to the downside. WTI is off around -2% this morning to the 72.25 level (October), while RBOB is off -2.40% to 204.32. Diesel (Heating-Oil) is the strongest of the group being down only -1.26% to the 225.00 level.
Production plans out of OPEC+ is a catalyst we’ve keyed in on as being the next major driver in crude pricing trends. While markets still await a final, official announcement from the group, the uncertainty is still being traded as bearish this morning.
Yesterday, Libya announced Force Majeure of their El Feel Crude Oil field. Normally this would be a decent bull catalyst, but OPEC+ production increases will likely be at a level that offsets the Libyan barrels being taken off the market. Other catalysts moving the markets include continued weakness out of China and doubts surrounding U.S. economic growth.
Pricing pressure will persist until we have word from OPEC. Again, we advise caution and that misinformation surrounding OPEC+ announcements is commonplace. But, unless OPEC publicly refutes these reports of production increases, the risk is pretty clearly to the downside.
Early weakness in WTI Crude Oil futures has taken out significant support at 72.20-72.59, which will now act as our Pivot and point of balance on the session. However, only a close back above 73.55-73.60 is needed to negate this early fallout. The next big level of support aligns multiple indicators at 71.46-71.93, and a close below here will confirm the bears are in the driver's seat.
Bias: Neutral
Resistance: 72.89-73.00** 73.55-73.60***, 74.02**, 74.33-74.85***
Pivot: 72.20-72.59***
Support: 71.46-71.93***, 70.88-70.92***, 69.60-69.81**, 67.98-68.61****
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