Crude Oil Price Update – Weakening Ahead of API Weekly Inventories Report

U.S. West Texas Intermediate crude oil futures are trading lower late Tuesday, shortly before the release of the weekly American Petroleum Institute’s weekly inventories report.

The market continues to be underpinned by the hopes of an agreement between Russia and Saudi Arabia for an output reduction of 10 million barrels per day (bpd), or at least close to 10 million bpd. Some traders also believe that a deal would depend on the United States agreeing to production cuts of their own.

Helping to keep a lid on prices is the threat of a major recession hanging over the market after the hit to economic activity as a result of the coronavirus pandemic, with half the global population under some form of lockdown or social distancing measures.

At 17:50 GMT, May WTI crude oil futures are trading $25.15, down $0.93 or -3.57%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up last Friday when prices surged to $29.13. A trade through this level will signal a resumption of the uptrend. The main trend will change to down on a move through $19.27.

The main range is $36.70 to $19.27. Its retracement zone at $27.99 to $30.04 is resistance. This zone stopped the rally at $29.13 on April 3.

The short-term range is $19.27 to $29.13. Its retracement zone at $24.20 to $23.04 is the primary downside target. Since the main trend is up, buyers are likely to return on a set of this zone.

Daily Technical Forecast

Based on the early price action and the current price at $25.15, the direction of the May WTI crude oil market into the close on Monday is likely to be determined by trader reaction to an uptrending Gann angle at $25.27.

Bearish Scenario

A sustained move under $25.27 will indicate the presence of sellers. This could trigger a break into a short-term 50% level at $24.20. Look for buyers on the first test of this level.

If $24.20 fails as support then look for the selling to possibly extend into the short-term Fibonacci level at $23.04.

Bullish Scenario

A sustained move over $25.27 will signal the presence of buyers. If this creates enough upside momentum then look for a potential late session rally into the downtrending Gann angle at $27.20. This angle provided resistance earlier today. Taking out this angle could trigger a surge into the main 50% level at $27.99.

Side Notes

At 20:30 GMT, the American Petroleum Institute (API) will release its inventory data for the week-ending April 3. The report is expected to show a 9.8 million barrel build.