Crude Oil Price Update – Weakens Under $65.92, Strengthens Over $66.95

U.S. West Texas Intermediate crude oil futures are trading lower early Wednesday after posting a steep-sell-off on Tuesday. The catalyst behind the selling pressure is private report showing increased U.S. crude inventories and growing concerns that a global economic slowdown will lead to a drop in demand.

At 0543 GMT, October WTI crude oil is trading $66.09, down $0.24 or -0.36%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $65.09 will signal a resumption of the downtrend. A move through $68.86 will change the main trend to up.

The main range is $62.60 to $71.29. The market is currently straddling the lower boundary of its retracement zone at $66.95 to $65.92. This zone is controlling the longer-term direction of the market.

Daily Technical Forecast

Based on the early price action, the direction of the October WTI crude oil market today is likely to be determined by trader reaction to the main Fibonacci level at $65.92.

A sustained move under $65.92 will indicate the presence of sellers. This could drive the market into the main bottom at $65.09. This price is a potential trigger point for an acceleration to the downside since the next major support doesn’t come in until $62.60.

A sustained move over $65.92 will signal the presence of buyers. If this move generates enough upside momentum then look for a rally into the main 50% level at $66.95.

Overtaking $66.95 will put crude oil on the strong side of the retracement zone. If this move can attract enough buyers then look for a test of yesterday’s high at $67.72. Overtaking this level will indicate the buying is getting stronger with the next objectives main tops at $68.86 and $69.19.

The news about lower demand is offsetting worries about the impact of the Iranian sanctions at this time. Additionally, investors are also watching the U.S. supply. Therefore, Wednesday’s U.S. Energy Information report, due to be released at 1430 GMT is likely to set the tone for the day. Traders are looking for a 2.6 million barrel draw down.