Crude Oil Price Update – Strengthens Over $58.66, Weakens Under $57.94

U.S. West Texas Intermediate crude oil futures are trading higher on Wednesday, shortly before the release of the U.S. Energy Information Administration (EIA) weekly inventories report at 14:30 GMT. Traders are looking for a 2.5 million barrel draw down. Today’s early strength is being fueled by a bullish report from the American Petroleum Institute (API) late Tuesday. It showed a bigger-than-expected draw down.

At 14:14 GMT, September WTI crude oil futures are trading $58.37, up $0.32 or +0.54%.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through $61.02 will change the main trend to up. A move through $54.85 will signal a resumption of the downtrend.

The minor trend is up. It turned up on Tuesday when buyers took out $57.64. This move shifted momentum to the upside.

The short-term range is $61.02 to $54.85. Its retracement zone at $57.94 to $58.66 is currently being tested. This zone overlaps the main 50% level at $58.41. This area is controlling the direction of the market today.

Daily Technical Forecast

Based on the early chart pattern and the current price at $58.37, the direction of the September WTI crude oil market is likely to be determined by trader reaction to the 50% level at $57.94 and the Fibonacci level at $58.66.

Bullish Scenario

A sustained move over $58.66 will indicate the presence of buyers. This could create the upside momentum needed to challenge the downtrending Gann angle at $59.27. Sellers could come in on the first test of this angle. Overcoming it could trigger a rally into the resistance cluster at $60.15 to $60.18.

Bearish Scenario

A sustained move under $57.94 will signal the presence of sellers. The first two downside targets are Gann angles at $57.52 and $57.10. If $57.10 fails then look for the selling to possibly extend into $56.00 and $55.79.