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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil prices are trading lower early Tuesday, offsetting some of the previous session’s gains, while continuing to adhere to its rangebound landscape. Once again, demand issues moved to the forefront as persistent worries over the impact of COVID-19 outweighed the optimism created by hopes for a new U.S. fiscal stimulus package.

At 07:01 GMT, December WTI crude oil is trading $40.47, down $0.40 or -0.98%.

On Monday, the market was pushed higher as investors reacted to the news of a new $2.2 trillion coronavirus relief bill from Democratic lawmakers. The logic behind the rally was simple – more stimulus, more money for consumer to spend on gasoline.

Later in the session on Tuesday at 20:30 GMT, traders will get the opportunity to react to the latest inventories data from the American Petroleum Institute. Traders estimate a slight rise in crude stockpiles, but drawdowns in gasoline and distillate inventories.

Daily December WTI Crude Oil

 Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is struggling to maintain its two-week upside bias triggered by the September 9 closing price reversal bottom.

A trade through $37.11 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through the last main top at $44.33.

The minor trend is also down. A trade through $42.02 will change the minor trend to up. This will reaffirm the shift in momentum.

The short-term range is $44.33 to $37.11. Its retracement zone at $40.72 to $41.57 is providing the resistance.

The minor range is $37.11 to $42.02. Its retracement zone at $39.57 to $38.99 is the support.


Short-Term Outlook

Our overall assessment is we’re in a rangebound trade with the retracement zone at $40.72 to $41.57 providing resistance and the retracement zone at $39.57 to $38.99 generating the support.

Fundamentally, expectations for lower demand are keeping a lid on prices, while the OPEC+ production cuts are creating the support.

Traders are likely to sell rallies and buy dips over the near-term until one of those factors change.

For a look at all of today’s economic events, check out our economic calendar.

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