Crude oil price settled lower on Tuesday September 19th, as US stockpile data showed the third consecutive rise in last month. On the New York Mercantile Exchange crude futures for November delivery fell by 43 cents to settle at $49.50 a barrel, according to data compiled by Bloomberg.
In May, both OPEC and Non-OPEC members reached an agreement to extend production cuts for nine months until March, although they stuck to production cuts of 1.8 million barrels per day agreed in last year.
From the other hand, a report from the Energy Information Agency on Monday, claimed that the U.S. shale production is set to rise for ten consecutive months in October which can weigh on the crude prices.
All this mixed data from the energy sector has made the investors confused and caused prices to be caught in a tight range bound. But in our belief, the outlook seems to be bright and prices are expected to rise in the mid-term as the chart below suggests.
As depicted in the chart below, the price action has formed a smooth rising channel supporting prices every time bouncing on. The sharp bounce back from $42 becomes significantly considerable as it has occurred at the appropriate time and price Fibonacci retracement, suggesting that the decline from $55 down to $42 is most probably a correctional move from a super wave that rose prices from $25 to high of $55. Bearing this in mind, the targets of next probable upward wave are derived from the retracement ratio of its previous correction, almost 50% in this case.
Another hint for higher prices in near-term is the bearish trend line which has been breached so far at $49.20. This area was the initial resistant zone which has now turned to a support area and is supposed to hold prices in case pulling back to it. From the resistive perspective, the crude has reached to 61.8% retracement of the so-called correctional wave at 50.20. This zone is very critical for any further rise as the horizontal resistant zone is overlapped here too. In other words, the crude has been caught in a very tight ranging area and it is supposed to get out from it soon.
A successful break of $50 level will push prices toward almost $59 and $63 in near and midterm time span respectively. On the flipside, breaching below $48.80 would lead the price to test $46 before any attempt to rise.
In abstract, we will continue to suggest the bullish trend in the upcoming sessions, noting that for our mentioned targets to achieve, holding above $48.80 in short term and $46 level in mid-term is vital.