Crude Oil Price Update – EIA Report on Tap; Strengthens Over $41.72, Weakens Under $41.24

U.S. West Texas Intermediate crude oil futures are edging lower shortly before the release of the U.S. Energy Information Administration (EIA) weekly inventories report at 14:30 GMT. It is expected to show a 2.1 million-barrel draw for the week-ending July 17, but traders are bracing for a large build after the American Petroleum Institute’s (API) bearish report on Tuesday.

At 14:08 GMT, September WTI crude oil futures are trading $41.40, down $0.52 or -1.24%.

Late Tuesday, the API reported U.S. crude inventories rose last week by 7.5 million barrels, against expectations for a draw of 2.1 million barrels.

Fear of a supply glut and demand destruction due to the country’s failure to contain the COVID pandemic are weighing on prices today. However, losses are likely being limited by hope of fresh fiscal stimulus from the U.S. government.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $42.51 will signal a resumption of the uptrend. The main trend will change to down on a trade through $39.97.

On the upside, the nearest resistance is a long-term 50% level at $41.72.

On the downside, minor support comes in at $41.24. This is followed by a retracement zone at $40.64 to $40.20.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the September WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to the minor pivot at $41.24.

Bullish Scenario

A sustained move over $41.24 will indicate the presence of buyers. This could lead to a retest of $41.72. This price is a potential trigger point for an acceleration into $42.51.

Bearish Scenario

A sustained move under $41.24 will signal the presence of sellers. This could create the downside momentum needed to challenge $40.64, followed by $40.20 and $39.97.

Side Notes

On Tuesday, the market broke out to the upside, filling the gap left in March at $42.49. However, buyers wouldn’t chase the market higher and the rally stalled at $42.51.