WTI oil futures (October delivery) have been losing ground since mid-August when the price failed to surpass the 97.70 mark. Moreover, apart from the price trading below its lower Bollinger band, the 50-day simple moving average (SMA) has dropped beneath the 200-day SMA completing a ‘death cross’, both reinforcing the thesis for a sustained bearish outlook.
The momentum indicators also suggest that near-term risks are tilted to the downside. Specifically, the stochastic oscillator is descending in the 20-oversold zone, while the MACD histogram is extending its retreat beneath both zero and its red signal line.
To the downside, further declines could cease at the seven-month low of 81.50. Dipping beneath that region, the bears could target 77.20 before the spotlight turns to the December 2021 resistance zone of 73.00. Even lower, the December support of 66.00 may prove to be a tough hurdle for the commodity to overcome.
On the flipside, bullish actions could propel the price towards the recent support zone of 85.50, which may now act as resistance. Conquering this barricade, the price might ascend towards 90.00 or higher to challenge the August peak of 97.70. A break above the latter could open the door for the 102.00 region.
Overall, WTI oil futures’ short-term picture is likely to deteriorate even further as the commodity appears to be facing tremendous downside pressure. For that bearish tone to reverse, the price needs to jump above the 97.70 ceiling.