Crude Oil Price Update – Despite Recession Worries, Demand Still Solid

U.S. West Texas Intermediate crude oil futures are edging higher for a second session on Tuesday as traders attempt to claw back some of last week’s steep losses.

Although the previous week’s decline is being blamed on recession worries, so far there hasn’t been any hard evidence that the global economy is heading in that direction. Reports released on Monday actually show solid demand for air and automobile travel.

At 09:51 GMT, August WTI crude oil futures are trading $110.42, up $1.65 or +1.52%. On Monday, the United States Oil Fund ETF (USO) settled at $83.36, down $4.30 or -4.91%.

Air, Automobile Travel Showing No Signs of Lower Demand

UBS analyst Giovanni Staunovo said that despite concerns over economic growth, latest data on flight activity and mobility on U.S. roads continues to show solid oil demand.

“We expect oil demand to improve further, benefiting from the reopening of China, summer travel in the northern hemisphere and the weather getting warmer in the Middle East. With supply growth over the coming months, we continue to expect higher oil prices,” he said.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $100.66 will change the main trend to down. A move through $120.75 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through $106.40 will signal a resumption of the downtrend. A move through $116.58 will change the minor trend to up.

The short-term range is $95.47 to $120.75. Its retracement zone at $108.18 to $105.18 is support. This zone stopped the selling at $106.40 on June 17.

The minor range is $116.58 to $106.40. Its pivot at $111.49 is the nearest resistance.

The second minor range is $120.75 to $106.40. Its retracement zone at $113.64 to $115.35 is the primary upside target.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at $108.18 is likely to determine the direction of the August WTI crude oil market on Tuesday.

Bullish Scenario

A sustained move over $108.18 will indicate the presence of buyers. The first upside target is the pivot at $111.49. Sellers could come in on the first test of this level. Overtaking it, however, could trigger a surge into the retracement zone at $113.64 – $115.35.

Bearish Scenario

A sustained move under $108.18 will signal the presence of sellers. The first downside target is $106.40, followed by the Fibonacci level at $105.18.

The retracement zone at $108.18 to $105.18 is controlling the short-term direction of the market. If it fails to hold, we could see another steep sell-off.