Crude Oil Price Update – Downside Bias Ahead of API Report; Strengthens Over $55.39, Weakens Under $54.99
U.S. West Texas Intermediate crude oil futures are trading lower on Tuesday shortly before the release of the American Petroleum Institute (API) weekly inventories report at 20:30 GMT. U.S. crude inventories are expected to have risen by around 700,000 barrels during the week-ending October 25. After the release of the API report, trader attention will shift to the official inventory figures from the Energy Information Administration (EIA) due on Wednesday.
At 19:46 GMT, December WTI crude oil is trading $55.39, down $0.42 or -0.75%.
Last week, there was a huge discrepancy in the reports. On October 22, the API reported that U.S. crude supplies rose by 4.45 million barrels for the week ended October 18. Traders were looking for the EIA report to show a 4.7 million build last week. Instead the EIA reported a 1.7 million barrel draw. It’s going to be interesting to see how the API and EIA reports reconcile the difference in this week’s report.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower with the formation of a closing price reversal top on Monday and its subsequent confirmation earlier today.
A trade through $56.92 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $52.46 will change the main trend to down.
The minor trend is also up. A trade through $52.85 will change the minor trend to down. This will also confirm the shift in momentum.
The main range is $62.74 to $50.89. Its retracement zone at $56.82 to $58.21 is resistance. This zone stopped the rally on Monday at $56.92.
The intermediate range is $59.11 to $50.89. Its retracement zone at $55.00 to $55.97 is currently being tested.
The short-term range is $50.89 to $56.92. Its retracement zone at $53.91 to $53.19 is the primary downside target.
Daily Technical Forecast
Based on the early price action and the current price at $55.39, the direction of the December WTI crude oil futures contract into the close on Tuesday is likely to be determined by trader reaction to the uptrending Gann angle at $55.39 and the downtrending Gann angle at $54.99.
A sustained move over $55.39 will indicate the presence of buyers. The first upside target is the intermediate Fibonacci level at $55.97, followed by the main 50% level at $56.82 and the main top at $56.92.
A sustained move under $54.99 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the next target the short-term 50% level at $53.91.