Crude Oil Price Update – Strong Downside Bias Could Drive WTI into $62.03

U.S. West Texas Intermediate crude oil futures are trading lower early Wednesday after weekly industry data showed an unexpected build in U.S. crude inventories and as Saudi Arabia pledged to keep markets balanced,

According to the American Petroleum Institute (API), U.S. crude stockpiles rose by 2.4 million barrels during the week-ending May 17, to 480.2 million barrels. Traders were looking for a decrease of 599,000 barrels.  At 14:30 GMT, investors will get the opportunity to react to the official data from the U.S. Energy Information Administration’s (EIA) weekly inventories report. It is expected to show a 1.2 million barrel draw.

At 03:57 GMT, July WTI crude oil futures are trading $62.63, down $0.50 or -0.79%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the closing price reversal bottom at $60.10 on May 6.

A trade through $63.96 will change the main trend to up. A move through $60.10 will signal a resumption of the downtrend.

The main range is $66.44 to $60.10. Its retracement zone at $63.27 to $64.02 is resistance. This zone stopped the rally on Monday at $63.96.

The short-term range is $60.10 to $63.96. Its retracement zone at $62.03 to $61.57 is the next downside target. Counter-trend buyers could come in on a test of this zone. They may try to form a secondary higher bottom.

The market is also trading inside a major 50% to 61.8% zone at $59.70 to $63.36. This zone is controlling the longer-term direction of WTI crude oil prices.

Additional support is being provided by the 200-day Moving Average at $60.70.

Daily Swing Chart Technical Forecast

The early bias is to the downside because of the bearish API report. If the EIA report is also bearish then the selling could extend into the 50% level at $62.03. If this fails then look for the selling to possibly extend into the Fibonacci level at $61.57. Counter-trend buyers could come in on a test of these levels.

If the EIA report is bullish then look for an intraday short-covering rally. If this creates enough upside momentum then look for the buying to possibly extend into the short-term 50% level at $63.27 and the major Fibonacci level at $63.36. The latter is a potential trigger point for an acceleration into $63.96 to $64.02.