*Note on our price chart: Before we dive into the WTI technical analysis, we have decided to use the WTI continuous futures price as a chart instead of the original spot price posted in our article. This price will match the nearest dated WTI Crude futures contract which will switch automatically once the contract settles, moving on to track the next nearest dated futures contract. We will also be only analyzing the technical aspect of the WTI price, given the fundamental aspect of WTI oil is well covered by many subject matter experts in the energy commodities section. At this time, the nearest dated futures contract being tracked by the above price chart is the July 2016 contract.
WTI oil prices fell into the end of the week despite stronger than expected inventory draw downs on Brexit fears and an increase in the Baker Hughes rig count suggesting levels above $50 are leading some drillers to restart idle rigs. It is important to note that WTI oil has now traded out of the technical channel to the downside, and is at risk of stronger decline taking hold to work off overbought conditions.
Given the short term oversold conditions in WTI oil, we expect a pullback for WTI oil in the early session next week to around $50.30 where short positions can be established to play a downside break of $48 which should then eventually lead to a downside test of $43 and $41 to work off overbought conditions, before resuming its current medium to longer term upside move.
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