Pound Sterling Live's WTI Oil Price Forecasts: 27.65 Next Target

WTI Crude has reached 30 dollars a barrel and is trying to break lower, charts suggest the 27's whilst fundamentals point to a critical cost point in the early 20s.

Today West Texas Crude reached new depths falling below the 2008 lows and touching $30.00 per barrel.

As the relentless down-trend continues, the fundamentals show no end in sight as reports of inventory surpluses appear never -ending and Opec remains reluctant to change policy.

Analysts at Bank of America Merrill Lynch do not yet see a bottom in oil but think that if it falls into the $20’s per barrel zone it might then be close:

“A decline into the $20s would mean that many companies would not be able to cover operating cash costs, marking a possible inflection point for oil.”

Chart View

Fundamentals aside let’s take a look at the price chart of WTI Crude, to hopefully gain another dimension and more insight into what levels and targets to watch as Oil slides lower.

The daily chart below shows the current down-trend in oil clearly, which appears to be moving lower within a descending channel.

The price has fallen so rapidly over the last two days, however, that it has actually breached the lower border of the channel in what could be a sign that it will accelerate even lower.

If the break holds, I would expect it to move a Fibonacci 61.8% of the height of the channel extrapolated down, which generates a downside target at 27.65.

The move down is complicated, however, by support from two major levels – the 2008 lows at 32.40 and the S2 Monthly Pivot at 31.20.

These levels are major obstacles to bears trying to push the commodity down.

The current price at the time of writing is 30.99, and although this seems to indicate these levels have been surpassed, ideally I would want to see an even deeper penetration and break below the key 30.00 handle before expecting the pair to reach all the way to 27.65.

I would, therefore be looking for confirmation from a break below 29.65, before expecting the pair to move down to the minimum price expectations at 27.65.

Interestingly these sorts of breaks to the down-side of descending channels can also mark exhaustion in the trend, and be precursors to recoveries, and if this is the case we may be close to a bottom of some kind.

Indeed, this would marry with the fundamental forecast of an inflection point in the $20s where oil becomes too costly to pump.