Crude Oil Price Update – Taking Out $57.75 Changed Daily Trend to Down

West Texas Intermediate crude oil futures are trading lower on Tuesday as demand concerns outweighed positive supply news. For two weeks, traders have been driving prices higher while focusing on supply issues, namely, the rising tensions in the Middle East, the extension of the OPEC-led supply cuts and renewed optimism over a US-China trade deal.

At 15:31 GMT, August West Texas Intermediate crude oil futures are trading $56.86, down $2.23 or -3.77%.

Prices are plunging on Tuesday in reaction to renewed concerns over demand after President Trump threatened new tariffs against the European Union. Furthermore, we could be looking at a “buy the rumor, sell the fact” situation after OPEC and its allies approved the deal to extend the supply cuts. Some traders are saying this news had been priced in for weeks.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier in the session when sellers took out the $57.75 swing bottom. A trade through $60.28 will change the main trend to up.

Traders may be responding to a series of retracement level resistance at $57.41, $58.51 and $58.97. On Monday, the rally stopped at $60.28, just short of the Fibonacci level at $60.33.

On the downside, a 50% level comes in at $57.41. Additionally, the short-term range is $50.79 to $60.28. This makes its retracement zone at $55.54 to $54.42 the primary downside target. Buyers could step in on a test of this area.

Daily Technical Forecast

Based on the early price action and the current price at $56.86, the direction of the August WTI crude oil futures contract the rest of the session will be determined by trader reaction to the 50% level at $57.41.

Bearish Scenario

A sustained move under $57.41 will indicate the presence of sellers. The next target is a downtrending Gann angle at $56.53. Crossing to the weak side of this angle will indicate the selling is getting stronger. This could trigger a break into a support cluster at $55.54. Look for a technical bounce on the first test of this level. If it fails then look for a potential acceleration into the short-term Fibonacci level at $54.42.

Bullish Scenario

A sustained move over $57.41 will signal the return of buyers. Potential intraday targets include $58.51 and $58.97.

Overview

Watch for volatility at 20:30 GMT with the release of the American Petroleum Institute’s weekly inventories report. A better-than-expected report could reverse the early weakness.