Crude Oil Price Update – Weekly Inventories Expected to Show Small Draw

August West Texas Intermediate crude oil futures are trading flat shortly before the regular session opening. Traders are concerned about the global supply glut due to increasing production from the United States, Libya and Nigeria.

Today’s U.S. Energy Information Administration’s weekly inventories report is expected to show a 1.2 million barrel draw down. Traders will also be watching the gasoline inventories number.

Yesterday’s drop in prices has the market in a position to post its worst first half of the year decline in almost 20 years. So far, oil has lost 20 percent in value from its top, putting it in a bear market.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through $45.28 will turn the main trend to up.

Taking out yesterday’s low will extend the downtrend. This could drive the market into the April 5, 2016 main bottom at $41.98.

Forecast

Based on the current price at $43.47, it looks as if buyers are defending yesterday’s low at $42.94. The market is also trading on the strong side of a pair of downtrending angles at $43.28 and $43.22. Holding above these levels will indicate the presence of buyers.

A sustained move over $43.28 will indicate the buying is getting stronger. This could generate the upside momentum needed to trigger a rally into the next downtrending angle at $44.28. This is followed by the previous bottom at $44.45 and another downtrending angle at $44.78.

Crossing back below the angle at $43.22 will indicate the presence of sellers. Taking out yesterday’s low at $42.94 will signal that the selling is getting stronger. If selling volume increases on the move then look for a possible break into $41.98.