Crude Oil Price Update – Buyers Unfazed by Powell’s ‘Significant Uncertainty’ Warning

U.S. West Texas Intermediate crude oil futures are trading higher on Tuesday after the International Energy Agency (IEA) increased its oil demand forecast for 2020 and as record supply cuts provided support.

In its monthly report on Tuesday, the IEA forecast oil demand at 91.7 million barrels per day in 2020, 500,000 bpd higher than its estimate in May’s report, citing higher than expected consumption during the lockdowns.

But the agency said a fall in flying because of the novel coronavirus means the world will not return to pre-pandemic demand levels before 2022.

At 14:12 GMT, August WTI crude oil is trading $39.14, up $1.71 or +4.57%.

BREAKING NEWS:  In his testimony before Congress, Federal Reserve Chairman Jerome Powell warned Tuesday about “significant uncertainty” regarding the pace of the U.S. economic recovery and said small businesses and lower income and minority Americans are particularly at risk. Powell’s warning was essentially a repeat of cautionary remarks he made last Wednesday following the FOMC meeting. Some traders blamed last week’s sell-off in crude on those comments.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $40.69 will signal a resumption of the uptrend. A move through $34.66 will change the main trend to down.

The short-term range is $31.63 to $40.69. Its retracement zone at $36.16 to $35.09 is support.

The main range is $54.71 to $20.28. Its retracement zone at $37.50 to $41.56 is currently being tested. This zone is controlling the longer-term direction of the market.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $39.14, the direction of the August WTI crude oil market the rest of the session on Tuesday is likely to be determined by trader reaction to the major 50% level at $37.50.

Bullish Scenario

A sustained move over $37.50 will indicate the presence of buyers. If this move can create enough upside momentum then look for a re-test of $40.69, followed by the main Fibonacci level at $41.56. This level is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $37.50 will signal the return of sellers. This could lead to a labored break with potential downside targets coming in at $36.16, $35.09 and $34.66.

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