Crude Oil Price Update – EIA Reports Surprise Jump in Stockpiles

U.S. West Texas Intermediate crude oil futures are trading lower on Wednesday, but the market is attempting to bounce back following the release of weekly government data. Although the report was bearish, it may have been priced into the market since yesterday’s American Petroleum Institute (API) report also came out worse than expected.

At 14:57 GMT, July WTI crude oil is trading $51.82, down $1.45 or -2.68%.

At 14:30 GMT, the U.S. Energy Information Administration (EIA) weekly inventories report showed U.S commercial crude inventories rose by 2.2 million barrels in the week-ending June 7. Traders were looking for a draw of about 500,000 barrels.

The market was under pressure before the inventory data after the EIA forecast lower demand due to global economic concerns.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $50.60 will signal the resumption of the downtrend. A move through $54.84 will change the main trend to up.

The market is also trading on the weak side of a retracement zone at $55.32 to $52.70. This is adding to the downside bias.

Daily Technical Forecast

Based on the early price action and the current price at $51.82, the direction of the July WTI crude oil market is likely to be determined by trader reaction to the uptrending Gann angle at $51.85.

Bearish Scenario

A sustained move under $51.85 will indicate the presence of sellers. This could trigger a break into the next uptrending Gann angle at $51.23. This is the last potential support angle before the $50.60 main bottom. The next target is weekly support at $50.22. If this fails then look for the selling to possibly extend into $47.20.

Bullish Scenario

A sustained move over $51.85 will signal the presence of buyers. If this creates enough upside momentum then look for the buying to possibly extend into the Fibonacci level at $52.70, followed by the uptrending Gann angle at $53.10. Overtaking this level could help form a potentially bullish closing price reversal bottom.