Western US intermediate crude oil futures closed at their peak on Thursday as traders reacted to better-than-expected US non-farm payrolls and a drop in the unemployment rate as the time that showed little reaction to an increase in weekly unemployment claims and the increase in COVID-19 cases. Prices were also supported by a drop in US crude oil inventories reported earlier in the week.
On Thursday, August WTI crude settled at $ 40.65. For the week, the US benchmark index rose 4.7%.
Nonfarm payroll data represents the past, while weekly unemployment claims are the future. Currently, the market is being supported by lowering restrictions on travel and business, raising hopes for future demand. However, a second wave of coronavirus will lower these hopes and likely put a price cap.
If states begin to impose new restrictions or blockades, prices are likely to back down as this should lead to a drop in demand for gasoline and distillates.
Technical analysis of daily swing chart
The main trend increases according to the daily chart of changes. A $ 41.63 trade will indicate a resumption of the uptrend. A move through $ 37.08 will change the main downward trend.
The lower range is from $ 41.63 to $ 37.08. Its 50% level or pivot at $ 39.36 is controlling the direction of the market in the short term. Closing above this level makes it compatible.
The short-term range is from $ 34.66 to $ 41.63. Its 50% level at $ 38.15 is also support.
The intermediate range is from $ 31.63 to $ 41.63. Its retracement zone of $ 36.63 to $ 35.45 is also supported.
The biggest long-term resistance is the Fibonacci level at $ 41.56.
Short-term outlook
We will observe the reaction of traders to the pivot below $ 39.36 and the main Fibonacci level at $ 41.56 on Monday, as they are likely to determine the next move in the market.
Taking out $ 39.36 will be a sign of weakness. However, due to the series of 50% retracement levels at $ 38.15, $ 37.50 and $ 36.63, we are likely to see a difficult break.
On the upside, however, taking out $ 41.56 will doom and sustaining the move will likely trigger an upward acceleration.
