The crude oil price (OIL) crashed abruptly this week. After topping at 77 USD in October its price started declining in November with a notable acceleration this week. What’s the real reason behind this crash? What’s next for crude oil?
Crude Oil Price Crash of November: The real reason
The crashing crude oil price according to multiple analysts and news outlets is due to oversupply worries, along with potential slow down in global demand due to a gloomy economic outlook.
Does the reason why crude oil’s price crashed matter? not really. We could come up with multiple and contradicting reasons explaining the sharp drop. Instead, we prefer to look at the chart to understand what happened and what is likely to happen next. That is the only way to be prepared to benefit from the different possible scenarios that can unfold.
This article will provide a mid-term outlook for crude oil based on the recent price movement and important historical price levels. We will cover the likely scenarios and try to uncover and highlight the path of the least resistance.
Crude Oil Price Crash: The chart
The chart below covers WTIC’s price for the last 5years. From the chart below, we observe the following:
- Crude oil’s price lost the ascending trend line that started in 2017. However, it is trading now at major support levels.
- If it follows the previous pattern, it will probably be a double bottom before another leg up. So a bounce back to 60 – 62 then 55 then a retest of 60 – 62 that could lead to a breakout.
- If the price drops below the current support levels, we will see crude trade at $40 – $42 very soon.