Crude Oil Price Update – Testing Low End of Key Retracement Zone at $52.70

U.S. West Texas Intermediate crude oil is edging lower ahead of the late session close and after the release of the weekly American Petroleum Institute’s storage report. Judging from the market’s reaction, the report must have been bearish. We’re still crunching the numbers.

Crude oil prices retreated most of the session on Tuesday as worries over a global economic slowdown and uncertainty over future demand continued to weigh on prices. Traders chose to follow the strict supply/demand fundamentals instead of the “risk-on” tone in the stock market.

At 20:47 GMT, July WTI crude oil is trading $52.89, down $0.36 or -0.68%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $52.11 will signal a resumption of the downtrend. The next major downside target is the December 24 main bottom at $44.20.

The market is in no position to change the main trend to up, but it is in the window of time for a potentially bullish closing price reversal bottom. We could see this chart pattern emerge on Wednesday, following the release of a bullish U.S. Energy Information Administration (EIA) weekly inventories report.

The main range is $44.20 to $66.44. Its retracement zone at $55.32 to $52.70 is currently being tested. This zone is controlling the longer-term direction of the market.

Daily Technical Forecast

Based on Tuesday’s price action, the direction of the July WTI crude oil market early Wednesday is likely to be determined by trader reaction to the Fibonacci level at $52.70.

Bearish Scenario

A sustained move under $52.70 will indicate the presence of sellers. If this move creates enough down side momentum then look for another potential acceleration to the downside with $44.20 the next major downside target.

Bullish Scenario

A sustained move over $52.70 will signal the return of buyers. If this creates enough upside momentum then look for a potential rally back into the main 50% level at $55.32.