Crude Oil Price Update – Strengthens Over $71.14, Weakens Under $70.40

Crude oil futures are trading higher shortly before the regular session opening. The market is being supported by bullish fundamentals that point toward a potential supply deficit later in the year. The catalysts behind today’s rally are supply disruptions in Libya and Canada, and yesterday’s announcement by the U.S. State Department of zero exports from Iran.

At 1140 GMT, August West Texas Intermediate crude oil futures are trading $71.12, up $0.59 or +0.85%.

Look for volatility at 1430 GMT with the release of the U.S. Energy Information Administration’s weekly inventories report. It is expected to show a 2.4 million barrel draw. Late yesterday, the American Petroleum Institute’s (API) weekly report showed a larger than expected draw of 9.228 million barrels.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $72.70 will reaffirm the uptrend.

Today is the seventh day up from the last swing bottom, so the session begins with the market in the window of time for a closing price reversal top. If formed and confirmed, this could trigger the start of a 2 to 3 day correction or at least half of the rally from $63.40.

Support is a long-term Fibonacci level at $70.51. This is followed by $69.15 and $68.05.

Daily Technical Forecast

Based on the current price at $71.18, the direction of the August WTI crude oil market the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at $71.14.

A sustained move over $71.14 will indicate the buying is getting stronger. This could trigger a rally into the next downtrending Gann angle at $71.92. This is the last potential resistance angle before the $72.70 main top.

A sustained move under $71.14 will signal the return of sellers. This could drive the market into a support cluster at $70.51 to $70.40.

Taking out $70.40 with conviction could lead to the start of an acceleration into $69.15 then $68.05. This is followed by an uptrending Gann angle at $66.90.

Basically, look for the upside bias to continue on a sustained move over $71.14 and for a downside bias to develop on a sustained move under $70.40.