Crude Oil Price Update – Weakens Under $51.14, Strengthens Over $52.96

U.S. West Texas Intermediate crude oil futures plunged on Wednesday following an unexpected rise in U.S. crude inventories. A government report also showed a more than expected build in gasoline and distillate stockpiles.

According to the U.S. Energy Information Administration, U.S. commercial crude inventories jumped by 6.8 million barrels in the week-ending May 31. Traders were looking for a draw of 1.7 million barrels. According to the EIA, stockpiles jumped despite refineries increasing activity and as U.S. crude imports surged by more than 1 million barrels per day.

At 16:48 GMT, July WTI crude oil futures are trading $51.38, down $2.10 or -3.93%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The next swing chart target is the December 24 main bottom at $44.20. The main trend will change to up on a trade through $63.96. This is highly unlikely, however, due to the prolonged move down in terms or price and time, the market is currently inside the window of time for a closing price reversal bottom. This chart pattern may be the only help for bullish traders at this time.

The main range is $44.20 to $66.44. Its retracement zone at $55.32 to $52.70 is controlling the longer-term direction of the market. The break to the bearish side of this zone has turned it into resistance.

Daily Technical Forecast

Based on the early price action and the current price at $51.38, the direction of the July WTI futures contract into the close is likely to be determined by trader reaction to the uptrending Gann angle at $51.14.

Bearish Scenario

A sustained move under $51.14 will indicate the presence of sellers. If this move continues to create strong downside momentum then look for an extension of the selling into the next uptrending Gann angle at $47.67. This is the last potential support angle before the $44.20 main bottom.

Bullish Scenario

A sustained move over $51.14 will signal the return of buyers. If this move can generate enough upside momentum then look for the rally to possibly lead to a retest of the Fibonacci level at $52.70, followed by the steep downtrending Gann angle at $52.96. This angle has been moving down at a rate of $1.00 per day since May 20. Crossing to the strong side of this angle will signal a shift in sentiment.