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James Hyerczyk
Crude Oil WTI Brent

U.S. West Texas Intermediate crude oil futures are trading lower late in the session on Wednesday. The market is giving up earlier gains after the release of a mixed government inventories report.

U.S. crude oil stockpiles rose less than forecast and distillate inventories jumped but gasoline posted a drawdown for the second straight week, the Energy Information Administration (EIA) said on Wednesday.

At 18:11 GMT, June WTI crude oil is trading $23.16, down $1.40 or -6.70%. This is down from an intraday high of $26.08.

Despite the better-than-expected EIA crude oil data, prices likely declined because of the huge build in distillates that reflected the demand destruction on the airline and over-the-road truck industries.

Also weighing on prices was the news that inventories at the Cushing, Oklahoma, delivery hub, rose for a ninth straight week, rising 2.1 million barrels last week to 65 million barrels, their highest in three years, the EIA said.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The current 11 day rally was just short-covering. It did nothing to momentum or the minor or major downtrends.

The main trend will change to up on a trade through the last main top at $33.15. A move through the last swing bottom at $6.50 will signal a resumption of the downtrend.

The prolonged move up in terms of price and time has put the June WTI crude oil futures contract inside the window of time for a potentially bearish closing price reversal top. If formed then confirmed, this could lead to the start of a 2 to 3 day retracement on the 11 session rally.

The intermediate range is $48.92 to $6.50. Its retracement zone at $27.71 to $32.72 is resistance.

The short-term range is $33.15 to $6.50. Its retracement zone at $22.97 to $19.83 is potential support.

The minor range is $6.50 to $26.08. Its 50% level at $16.29 is the primary downside target.


Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $23.16, the direction of the June WTI crude oil futures contract into the close on Wednesday is likely to be determined by trader reaction to the short-term Fibonacci level at $22.97.

Bearish Scenario

A sustained move under $22.97 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the Fibonacci level at $19.83.

Bullish Scenario

A sustained move over $22.97 will signal the presence of buyers. Turning higher for the session will indicate the buying is getting stronger. This could lead to a test of the intraday high at $26.08, followed by the 50% level at $27.71.

Side Notes

The most important number into the close will be yesterday’s close at $24.56.

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