Nymex WTI crude oil had its worst day on Thursday since March 8, dropping $2.30 per barrel and is down approximately 15% from its April 12 high.
Many analysts had expected the March lows around $47.50 per barrel to serve as support, especially after the crude oil settled well above intraday lows the last few days, but that support was blown away and may suggest further technical weakness. This is especially true if you look at the June 2017 contract.
The chart below shows the front month continuous contract, which indicates that Thursday’s losses could extend slightly further to test the late November 2016 low or the early November low around $43.
However, if you look at June contract and not the continuous, you can see that Thursday’s sell-off may have done more technical damage. Yesterday’s low in the June contract sets a low going back to last August (see chart below).
The low also breaks the 50% Fibonacci retracement level from the January 2016 low and a double-bottom around $47. This suggests a further test of support. The Nymex June contract spiked lower overnight below $44 and has rebounded to positive territory. The levels to watch on the close is $44.84, which is the low close in the June contract from August and the front month low close of $43.41 from Nov. 11. The August low also closely correlates with the 61.8% Fibonacci retracement of the January 2016 low in the June contract. A breach of either would suggest further technical damage.