Crude Oil Price Update – Weakens Under $84.23, Strengthens Over $85.68

U.S. West Texas Intermediate crude oil futures are edging lower late in the session on Tuesday ahead of today’s American Petroleum Institute’s (API) and tomorrow’s U.S. Energy Information Administration’s (EIA) weekly inventories reports.

Both are expected to show that U.S. crude oil stocks rose by about 2 million barrels during the week-ending September 16, according to a Reuters poll.

At 18:10 GMT, November WTI crude oil futures are trading $84.28, down $1.08 or -1.27%. The United States Oil Fund ETF (USO) is at $69.24, down $0.81 or-1.16%.

WTI crude oil futures were pressured throughout the session as demand for higher risk assets fell and the U.S. Dollar rose amid expectations of an aggressive interest-rate hike by the Federal Reserve on Wednesday.

Higher rates have bolstered the dollar, which remained near a two-decade high against a basket of major currencies on Tuesday, making dollar-denominated oil more expensive for foreign traders.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $80.89 will reaffirm the downtrend. A move through $89.63 will change the main trend to up.

The main range is $96.82 to $80.89. Its retracement zone at $88.86 is resistance. It stopped the rally at $89.63 on September 14.

The first minor range is $80.89 to $89.63. The market is currently straddling its retracement zone at $85.26 to $84.23. A second minor pivot is resistance at $85.68.

Short-Term Outlook

Trader reaction to the retracement zone at $85.68 to $84.23 is likely to determine the short-term direction of the November WTI crude oil market. Buyers are trying to create a potentially bullish secondary higher bottom. Sellers are looking to signal a resumption of the downtrend.

Bearish Scenario

A sustained move under $84.23 will signal the presence of sellers. If this creates enough downside momentum then look for a test of the minor bottom at $81.73. If this level fails then look for the selling to possibly extend into the main bottom at $80.89.

Taking out $80.89 will reaffirm the downtrend and could trigger the start of an acceleration to the downside.

Bullish Scenario

A sustained move over $85.68 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to possibly lead to a retest of the 50% level at $88.86, followed by the main top at $89.63 and the Fibonacci level at $90.73.