Crude Oil Price Update – Bearish EIA Report Could Accelerate the Selling Pressure

U.S. West Texas Intermediate crude oil futures are trading at an 18-year low on Wednesday as worries over a global recession are fueling fears of longer-term demand destruction. Oil prices are getting crushed on both the supply and demand side.

The near shutdown of worldwide travel and business activity is driving down demand. Additionally, the market is also bracing for a flood of surplus barrels as Saudi Arabia and Russia prepare to ramp up production.

At 14:00 GMT, May WTI crude oil is trading $24.75, down $2.58 or -9.44%.

Meanwhile, today’s U.S. Energy Information Administration (EIA) weekly inventories report, due to be released at 14:30 GMT, is expected to show a 3.5 million barrel build.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Tuesday when sellers took out the last swing bottom at $27.83.

The next downside target is the 2000 bottom at $21.37.

Daily Technical Forecast

Based on the early price action and the current price at $24.75, the direction of the May WTI crude oil market the rest of the session on Wednesday is likely to be determined by trader reaction to a steep downtrending Gann angle at $26.82.

Bearish Scenario

A sustained move under $26.82 will indicate the presence of sellers. If this continues to generate enough downside momentum then look for the selling to possibly extend into $21.37.

Bullish Scenario

A sustained move over $26.82 will signal the presence of buyers. Overtaking yesterday’s close at $27.21 will indicate the buying is getting stronger. This will also put the market in a position to form a potentially bullish closing price reversal bottom.

Side Notes

We’re looking for a test of $21.37 by March 20 to March 23.