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James Hyerczyk
WTI Crude Oil

Worries over a global recession because of the escalating tensions between the United States and China are helping to drive U.S. West Texas Intermediate crude oil futures sharply lower on Wednesday. Increasing tensions in the Middle East and expectations of another draw down in government reported inventories may be slowing down the selling pressure, however, not enough to offset the low demand concerns.

At 13:23 GMT, September WTI crude oil futures are trading $52.24, down $1.39 or -2.57%.

At 14:30 GMT, traders will get the opportunity to react to the latest inventories report from the U.S. Energy Information Administration (EIA). The report is expected to show a 2.9 million barrel draw down.

Late Tuesday, the American Petroleum Institute (API) weekly inventories report showed a bigger-than-expected draw down, but the news failed to excite buyers.

Daily September WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart. The next downside targets are a pair of bottoms at $51.15 and $50.91. The market is in no position to change the main trend to up, but it is in the window of time for a closing price reversal bottom.

Resistance is the long-term retracement zone at $52.78 to $55.29. Inside this zone is an uptrending Gann angle at $54.28.


Daily Technical Forecast

Based on the early price action and the current price at $52.24, the direction of the September WTI crude oil futures contract the rest of the session is likely to be determined by trader reaction to the Fibonacci level at $52.78.

Bearish Scenario

A sustained move under $52.78 will indicate the presence of sellers. If this continues to generate enough downside momentum then look for the selling to possibly extend into a pair of bottoms at $51.15 and $50.91.

Taking out $50.91 will reaffirm the downtrend. This could trigger a steep break into an uptrending Gann angle at $49.46.

Bullish Scenario

Overcoming $52.78 will signal the return of buyers. Turning higher for the session will put the market in a position to form a potentially bullish closing price reversal bottom.

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