June WTI Crude Oil Struggling with $105.77 – $109.40 Retracement Zone

U.S. West Texas Intermediate crude oil futures are inching lower early Monday while trading inside the previous session’s range for a second day, indicating investor indecision and impending volatility.

After posting a solid weekly performance, WTI oil prices are being pressured by weak China data and fears of a global recession that could weigh on demand. At the same time, prices are being propped up by speculation of a European Union embargo on Russian oil that could constrict already tight global supplies.

At 07:03 GMT, June WTI crude oil is trading $108.77, down $1.00 or -0.91%. On Friday, the United States Oil Fund ETF (USO) settled at $82.15, up $1.67 or +2.08%.

Bearish News from China, Promising Development in Europe

In supply and demand related news, China’s crude oil imports grew nearly 7% in April from the same month a year earlier, its first rise in three months, although weakening fuel demand due to COVID-19 lockdowns has dampened throughput at Chinese refineries, Reuters reported.

Additionally, imports for January-April fell 4.8% versus the same period last year to 170.89 million tonnes, or about 10.4 million bpd.

Meanwhile, Saudi Arabia lowered the price of its Arab Light crude grade to Asia and Europe for the month of June, according to a pricing document released by oil producer Saudi Aramco on Sunday and reported by Reuters.

Traders are also waiting for the final decision from the European Commission on the start of an embargo of Russian oil. This is potentially bullish news but traders seem to be waiting for the details of the plan to be released before making their move.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $113.51 will reaffirm the uptrend. A move through $95.28 will change the main trend to down.

The minor trend is also up. A trade through $100.28 will change the minor trend to down. This will also shift the momentum.

The main range is $121.17 to $90.37. The market is currently testing its retracement zone at $105.77 to $109.40.

The short-term range is $92.60 to $111.37. Its retracement zone at $101.99 to $99.77 is support.

Daily Swing Chart Technical Forecast

The direction of the June WTI crude oil market on Monday is likely to be determined by trader reaction to $109.40.

Bullish Scenario

A sustained move over $109.40 will indicate the presence of buyers. This could trigger a move into last week’s high at $111.37 later today. Overtaking this level will likely fuel a surge into the main top at $113.51. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $109.40 will signal the presence of sellers. If this creates enough downside momentum then look for a break into the 50% level at $105.77. Buyers could come in on the first test of this level, but if it fails, prices could plunge to $101.99 – $99.77.