Crude Oil Price Update – EIA Report Sets the Tone; Trend up, but Momentum Down

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the release of the government weekly inventories report. Prices are being pressured after an industry report showed a rise in crude inventories in the United States, reviving concerns about oversupply and weak demand due to the coronavirus crisis.

At 14:09 GMT, July WTI crude oil is trading $38.19, down $0.75 or -1.93%.

The report from the American Petroleum Institute (API) showed crude stocks rose by 8.4 million barrels. Analysts were looking for a build of less than 2 million barrels.

At 14:30 GMT, the U.S. Energy Information Administration (EIA) weekly inventories report is expected to show a 1.8 million barrel draw down.

Prices could plunge if the EIA report matches the API number.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower following Monday’s closing price reversal top and yesterday’s subsequent confirmation.

A trade through $40.44 will negate the closing price reversal to and signal a resumption of the uptrend. The main trend will change to down on a trade through $31.14. This is highly unlikely today but there is room for a normal 50% to 61.8% retracement.

The main range is $54.86 to $17.27. Its retracement zone at $36.07 to $40.50 is controlling the longer-term direction of the market.

The short-term range is $31.14 to $40.44. Its retracement zone at $35.79 to $34.69 is the primary downside target.

A support cluster has formed at $36.07 to $35.79. Since the main trend is up, buyers could come in on a test of this area.

Daily Swing Chart Technical Forecast

A bearish EIA report could trigger a break into $36.07, followed by $36.07 and $34.69.

A bullish EIA report could trigger a quick rally into a minor pivot at $38.76, followed by a resistance cluster at $40.44 to $40.50.

An additional upside target is the top of a gap at $41.88.