Crude Oil Price Update – Slightly Better Ahead of API’s Expected Drawdown

U.S. West Texas Intermediate crude oil futures are edging lower late in the session on Tuesday after confirming yesterday’s potentially bearish closing price reversal top. This suggests that today’s weakness is tied to the technical chart pattern.

A closing price reversal top is not a change in trend, but it usually indicates the selling is greater than the buying at current price levels. In this case with the market so close to the contract high and in a strong uptrend, it is probably in place to alleviate some of the upside pressure before a resumption of the uptrend.

At 17:36 GMT, July WTI crude oil is trading $117.95, down $0.55 or -0.46%. The United States Oil Fund ETF (USO) is at $88.65, up $0.26 or +0.29%.

Fundamentally, traders are trying to balance risk sentiment with supply concerns and the prospect of higher demand as China relaxes its COVID curbs.

Fresh supply news could move the market later today with the release of the American Petroleum Institute’s (API) weekly inventories report at 20:30 GMT. It is expected to show a crude oil draw of 2.2 million barrels.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of Monday’s closing price reversal top. A trade through $120.99 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $103.24 will change the main trend to down.

The minor trend is up. A trade through $111.20 will change the minor trend to down. This will confirm the shift in momentum.

The nearest support is a pair of pivots at $116.10 and $114.80. This is followed by another pivot at $112.12. This is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

Trader reaction to $119.31 is likely to determine the direction of the July WTI crude oil futures contract into the close on Tuesday.

Bullish Scenario

A sustained move over $119.31 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for a late session surge into $120.99, followed by $121.17. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $119.31 will signal the presence of sellers. This could trigger a late session break into $116.10 – $114.80.