Crude Oil Price Update – Bullish API Report Could Drive Crude into $69.69 – $70.76 Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Tuesday and shortly before the release of the American Petroleum Institute (API) weekly inventories report at 20:30 GMT.

The rally is likely being fueled by short-covering and profit-taking following a steep decline. Although gains are likely being limited by concerns over demand destruction caused by the surge in COVID-19 Delta variant cases, traders seem a little more optimistic that demand will eventually improve in Europe and the United States as more vaccinations are distributed.

At 18:59 GMT, September WTI crude oil futures are trading $68.57, up $2.09 or +3.14%.

Today’s API inventories report is expected to show that U.S. crude, gasoline, and other product inventories are likely to have dropped last week, with gasoline stocks forecast to fall for a fourth consecutive week, a preliminary Reuters poll showed on Monday.

Crude oil inventories are expected to have fallen by about 1.1 million barrels in the week to August 6, according to the average estimate of six analysts polled by Reuters.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $65.01 will reaffirm the downtrend. A move through $74.23 will change the main trend to up.

The minor trend is also down. A trade through $70.18 will change the minor trend to up and shift momentum to the upside.

The major support area is $66.35 to $64.05. This zone is controlling the near-term direction of the market. It stopped the selling at $65.15 on Monday and at $65.01 on July 20.

The minor range is $70.18 to $65.15. The market is currently trading on the strong side of its 50% level at $67.67, making it new support.

The short-term range is $74.23 to $65.15. Its retracement zone at $69.69 to $70.76 is the next upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the September WTI crude oil market into the close is likely to be determined by trader reaction to $67.67.

Bullish Scenario

A sustained move over $67.67 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into $69.69 to $70.76.

Look for sellers on the first test of $69.69 to $70.76. Taking out $70.76, however, could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under $67.67 will signal the return of sellers. This could trigger another test of the retracement zone at $66.35 to $64.05 including the minor bottom at $65.15 and the main bottom at $65.01.