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Crude Oil Price Update – Recovers from Early Weakness on Concerns Over Tight Global Supplies

By:
James Hyerczyk
Updated: Jun 14, 2022, 04:48 UTC

On the supply side, OPEC and its allies are having trouble fulfilling a pledge to increase output because of a lack of capacity in many producers.

WTI Crude Oil

In this article:

U.S. West Texas Intermediate crude oil futures inched higher on Monday in a volatile session that saw the U.S. benchmark rebound from a four-day low. At the end of the session, traders said it was concerns over tight global supplies that outweighed worries that demand would be pressured by a flare-up in COVID-19 cases in Beijing and more interest rate hikes, driving the recovery.

On Monday, August WTI crude oil settled at $118.25, up $0.13 or +0.11%. The United States Oil Fund ETF (USO) finished at $90.34, up $0.21 or +0.23%.

On the supply side, according to Reuters, OPEC and its allies are having trouble fulfilling a pledge to increase output because of a lack of capacity in many producers, sanctions on Russia and unrest in Libya that has slashed output.

Meanwhile, prompting demand concerns, Beijing’s most populous district Chaoyang announced three rounds of mass testing to quell a “ferocious” COVID-19 outbreak.

Daily August WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through $120.75 will signal a resumption of the uptrend. The main trend changes to down on a trade through $100.66.

The minor trend is down. It changed to down on Monday when sellers took out the minor bottom at $115.04. This move shifted momentum to the downside.

The first minor range is $120.75 to $114.90. Its pivot comes in at $117.83.

The next two minor support levels come in a $114.85 and $113.35. The short-term retracement zone at $110.71 to $108.33 is the support zone propping up the market.

Short-Term Forecast

Trader reaction to the pivot at $117.83 is likely to determine the direction of the August WTI crude oil market early Tuesday.

Bullish Scenario

A sustained move over $117.83 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the main top at $120.75. Overtaking this level could lead to a quick test of the June contract high at $121.17, followed by the July contract high at $123.18.

Bearish Scenario

A sustained move under $117.83 will signal the presence of sellers. This could trigger a steep plunge into the support cluster at $114.90 – $114.85, followed by $113.35.

Taking out $113.35 will indicate the selling pressure is getting stronger with the short-term retracement zone at $110.71 – $108.33 the next target zone.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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