A combination of events helped drive September crude oil futures higher this week, setting up a potential resumption of the uptrend which came to a halt two-weeks ago. Supply issues as well as a weaker U.S. Dollar helped drive crude oil prices higher from a June low at $92.60 to the July high at $108.93. Concerns about supply were raised again this week, triggering a massive turnaround and creating the momentum needed to perhaps test $108.93 over the very short-term.
With the easing of tensions in Egypt and talk of the Fed reducing its monetary stimulus as early as September, crude oil prices dropped from $108.93 on July 19 to a July 30 low at $102.67. The technical picture remained bullish however since the chart indicated the potential for a normal retracement back to $100.77 to $98.84. Buyers instead stepped in on an uptrending Gann angle at $102.60 to turn the market back up.
This week, the uptrending Gann angle moves to $104.60. A failure near the top at $108.93 and a subsequent break under this angle will signal the end of the rally and possibly lower prices. Otherwise the market will remain bullish with the angle guiding the market higher along with increasing upside momentum.
Fundamentally, supply issues continue to remain the main driver of higher prices. Traders seem to be immune to the possibility the Fed will begin reducing its $85 billion per month stimulus program by as much as $20 billion per month as early as September.