Crude Oil Price Update – Reversing Earlier Gains Ahead of API Report; Strong Over $42.25, Weak Under $42.01

U.S. West Texas Intermediate crude oil futures are trading lower shortly after the regular session opening on Tuesday, reversing earlier gains as investors squared positions ahead of Wednesday’s meeting of a panel representing ministers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+. Earlier in the session, prices rose and came within striking distance of its five-month high before sellers took over.

At 14:04 GMT, October WTI crude oil futures are trading $42.83, down $0.34 or -0.79%.

The panel, called the Joint Ministerial Monitoring Committee (JMMC), monitors OPEC+ production curbs agreed earlier this year. Last month, the JMMC recommended that cuts be eased from August 1 to about 7.7 million barrels per day (bpd) from a reduction of 9.7 million bpd since May, in line with an earlier OPEC+ agreement.

Traders will be primarily concerned with whether there will be another adjustment to the quota in September.

Later today at 20:30 GMT, traders will get the opportunity to react to the latest weekly inventories data from the American Petroleum Institute (API). The report is expected to show a 2.9 million barrel drawdown in crude oil inventory, however, traders are going to be watching the gasoline and distillate numbers because they best represent demand.

A report from Reuters earlier in the day said that the hedge funds are avoiding crude oil because of the uncertainty, but instead are betting that the products – gasoline and distillates – will outperform.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $43.68 will signal a resumption of the uptrend. The main trend changes to down on a move through $39.00.

The minor trend is also up. The minor trend will change to down on a trade through $41.33. This will also shift momentum to the downside.

The best support is the major 50% level at $42.01. This level is controlling the longer-term direction of the market.

The next support zone is a 50% level at $41.34 and the Fibonacci level at $40.79.

Daily Technical Forecast

Based on the current price at $42.83, the direction of the October WTI crude oil futures contract into the close on Tuesday is likely to be determined by trader reaction to the uptrending Gann angle at $42.25.

Bullish Scenario

A sustained move over the uptrending Gann angle at $42.25 will indicate the presence of buyers. If this move creates enough upside momentum then buyers may make another run at $43.68.

Bearish Scenario

If $42.25 fails to hold then look for a labored break with a series of retracement levels at $42.01, $41.34 and $40.79, the next potential targets. These are followed by the uptrending Gann angle at $40.63.