Crude Oil Price Update – Next Major Test for Counter-Trend Bulls is $67.63 – $69.02 Retracement Zone

U.S. WTI crude oil futures are edging lower early Wednesday following two sessions of strong short-covering. The catalysts behind this week’s strength are the loss of more than 400,000 barrels per day of supply in Mexico following a fire on an oil platform, and signs that China, the world’s biggest importer, has curbed a recent coronavirus outbreak.

At 05:49 GMT, October WTI crude oil was trading $67.39, down $0.15 or -0.22%.

In other news, although demand in the United States appears to be holding steady during the latest coronavirus surge, a weekly report from the American Petroleum Institute (API) came in a little below expectations. This may be helping to cap gains on Wednesday.

Later today at 14:30 GMT, traders will get the opportunity to react to the latest weekly inventories data from the U.S. Energy Information Administration (EIA). It is expected to show crude oil stockpiles declined 1.9 million barrels.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside following the confirmation of Monday’s closing price reversal bottom.

A trade through $69.39 will change the main trend to up. A move through $61.74 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The short-term range is $73.52 to $61.74. Its retracement zone at $67.63 to $69.02 is the next upside target. Since the main trend is down, sellers could come in on the first test of this zone. They will be trying to defend the main top at $69.39.

The support is a retracement zone at $65.51 to $63.32. This zone could be controlling the near-term direction of the market. The longer crude oil can hold above this area, the better the odds for a change in trend to the upside.

Daily Swing Chart Technical Forecast

The direction of the October WTI crude oil market on Wednesday is likely to be determined by trader reaction to $67.63.

Bullish Scenario

A sustained move over $67.63 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into $69.02, followed closely by $69.39.

Taking out $69.39 will change the main trend to up and could trigger an acceleration to the upside since the daily chart indicates there isn’t any major resistance until $73.52.

Bearish Scenario

A sustained move under $67.63 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into $65.51 to $64.70. Aggressive counter-trend buyers could come in on a test of this area. They will be trying to form a potentially bullish secondary higher bottom.