Crude Oil Price Update – Trade Through $42.49 Fills Gap Formed in MarchThe direction of the September WTI crude oil market on Tuesday is likely to be determined by trader reaction to the 50% level at $41.72.
U.S. West Texas Intermediate crude oil futures are surging on Tuesday shortly before the regular session opening on the back of positive news about vaccine trials and a European Union stimulus deal. Speculative buyers are betting that both events lead to higher demand.
The news seems to be offsetting worries that a resurgence in COVID-19 cases would lead to a drop in fuel demand, and that struggling European countries would face an uphill battle in their attempts to grow their economies, severely damaged by the first wave of the coronavirus pandemic.
At 11:34 GMT, September WTI crude oil futures are trading $42.25, up $1.33 or +3.25%.
Later today at 20:30 GMT, traders will get the chance to respond to a weekly inventories report from the American Petroleum Institute (API). It is expected to show a 1.3 million barrel draw down for the week-ending July 17.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The main trend was reaffirmed earlier in the session when buyers took out a pair of main tops at $41.46 and $41.74. A trade through $39.97 will change the main trend to down.
The long-term range is $61.44 to $21.99. Its retracement zone at $41.72 to $46.37 is the primary upside target. Another target is $42.49. This is the top of the gap formed in March.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the September WTI crude oil market on Tuesday is likely to be determined by trader reaction to the 50% level at $41.72.
A sustained move over $41.72 will indicate the presence of buyers. If this move continue to generate enough upside momentum then look for a test of $42.49. Sellers could come in on the first test of this level, but keep in mind it is also the trigger point for an acceleration to the upside with an eventual target the long-term Fibonacci level at $46.37.
A sustained move under $41.72 won’t change the trend to down, but it will be a sign of weak buying or strong selling.
A move under $40.92 will turn the market lower for the session. This will put September WTI crude oil in a position to post a potentially bearish closing price reversal top.
A trade through $39.97 will change the main trend to down.
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