U.S. West Texas Intermediate crude oil futures jumped more than 2% on Friday. The new month and quarter began on an up note as political tensions in Libya and labor issues in Norway raised concerns about supply. Meanwhile, perhaps capping gains were expectations that an economic slowdown could dent demand.
On Friday, August WTI crude oil settled at $108.43, up $2.67 or +2.52%. The United States Oil Fund ETF (USO) finished at $81.70, up 1.35 or +1.68%.
What was significant about Friday’s gains was that they took place despite the release of factory data showing U.S. manufacturing activity slowed more than expected last month.
Additionally, the stock market slumped and the U.S. Dollar rose. Typically, a drop in stocks indicates a low tolerance for riskier assets. Furthermore, a stronger greenback tends to weigh on demand for dollar-denominated crude oil.
Short-Term Outlook
Trader reaction to a minor pivot at $109.06 is likely to determine the direction of the August WTI crude oil market early Monday. Volume is expected to be extremely light because of a U.S. bank holiday. Furthermore, the trading day will be limited to electronic trading.
Bullish Scenario
A sustained move over $109.06 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the short-term 50% level at $111.21. Taking out this level could drive the market into the short-term Fibonacci level at $113.49, followed closely by the main top at $114.05.
A trade through $114.05 will reaffirm the uptrend.
Bearish Scenario
A sustained move under $109.06 will signal the presence of sellers. This could lead to a labored break with potential targets coming in at $107.79 and $106.31.
If $106.31 is taken out then look for a test of Friday’s low at $104.56. A trade through this level will lead to a test of the major retracement zone support at $103.85 – $99.82.
The retracement zone at $103.85 to $99.82 is controlling the near-term direction of the market. It stopped the selling at $101.53 on June 22.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
More From FXEMPIRE:
Source: https://finance.yahoo.com/news/crude-oil-price-supply-worries-180457505.html