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James Hyerczyk
WTI Crude Oil

U.S. West Texas Intermediate crude oil is trading higher at the mid-session on Tuesday, nearly moving lock-step with the major U.S. stock indexes. The catalysts behind the rally is growing confidence that producers will continue to adhere to their commitments to reduce supply and as fuel demand gradually increases with coronavirus restrictions easing.

At 16:57 GMT, July WTI crude oil is trading $33.86, up $0.61 or +1.83%.

Both Russian and U.S. producers are being credited with doing their parts to follow-through on commitments to trim production and thereby reducing the supply glut.

The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June. Meanwhile, in an indication of lower supply in the future, data from energy services firm Baker Hughes showed that the U.S. rig count hit a record low of 31.8 last week.

Daily July WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $35.18 will change the main trend to up. A move through $17.27 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the upside momentum. A trade through $30.72 will change the minor trend to down. This will also shift momentum to the downside.

The main range is $54.86 to $17.27. Its retracement zone at $36.07 to $40.50 is the primary upside target. This zone could be controlling the longer-term direction of the market.

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Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $33.86, the direction of the July WTI crude oil market the rest of the session on Tuesday is likely to be determined by trader reaction to Friday’s close at $33.25.

Bullish Scenario

A sustained move over $33.25 will indicate the presence of buyers. If this is able to create enough upside momentum then look for a drive into the main top at $35.18, followed by the main 50% level at $36.07.

Bearish Scenario

A sustained move under $33.25 will signal the presence of sellers. This will put the market in a position to form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction of at least a 50% of the rally from $17.27.

Side Notes

Taking out the main top at $35.18 will be a bullish sign, but it may not be a good buying point because of the major retracement zone at $36.07 to $40.50 standing in the way.

For a look at all of today’s economic events, check out our economic calendar.

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