Crude oil prices continued to decline last week reaching a low at 6857 as demand hit a nine year low for the week ended Oct. 10. As demand has been in a steady downtrend, the price of a barrel of oil has been cut in more than half since peaking at 147.27 in July 2008. Crude oil closed the week out at 7185 on Friday's session of mild profit taking.
The overall technical trend remains down. However, we are likely to begin to see a pause in downward momentum with sideways to upward price action early this week as we've now hit our key monthly support range at 7100-6800. Additionally, in an effort to curb downward momentum, OPEC has moved their meeting up again to Oct. 24 and is expected to cut output by as much as 1 million bpd.
We'll be looking for upward moves this week to head into the 7500-7700 Resistance range, with the 7700 area being last week's key breakdown. Trade crossing above 7700 will be targeting the 8000 mark with OPEC goal to reclaim 8000 as their new benchmark price. If a settlement above 8000 is achieved for the week, we'll be looking at an expected trading range between 8000 and 9000 in the following weeks.
Trade that struggles this week at the 7500-7700 range is expected to leave downward pressure on oil, at least pre DOE reports and OPEC meeting, with dips retesting the 7100-6800 range. A turn below the lower end of the range at daily support 6850-6800 is expected to trigger a continuation of the major downtrend with the next objectives seen at 6300-6000 and potentially 5500 on any major DOE surprises.
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