Crude Oil Price Update – API Report Expected to Show 2.3M Draw

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Tuesday and shortly before the release of the American Petroleum Institute’s (API) weekly storage report. The strength comes as a surprise because concerns over a U.S. recession have deepened the yield inversion between the 2-year and 10-year Treasury notes. Demand for risky assets is also falling, sending investors into safe-haven gold and the Japanese Yen.

At 18:07 GMT, October WTI crude oil is trading $54.62, up $0.98 or +1.83%.

The API report will come out at 20:30 GMT. It is expected to show a 2.3 million barrel draw down. This may be helping to prop up prices late Tuesday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $52.96 will signal a resumption of the downtrend. The main trend will change to up on a trade through $57.13, followed closely by the next main top at $57.40.

The short-term range is $50.50 to $57.40. Its retracement zone is $53.95 to $53.14. The price action the last three sessions indicates that aggressive counter-trend buyers may have successfully established support at this zone.

The main range is $60.93 to $50.50. Its retracement zone at $55.72 to $56.95 is resistance. This zone essentially stopped recent rallies at $57.13 and $57.40 during August.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $54.62, the direction of the October WTI crude oil market into the late session close is likely to be determined by trader reaction to the short-term 50% level at $53.95.

Bullish Scenario

A sustained move over $53.95 will indicate the presence of buyers. If this move is able to generate enough upside momentum then the main 50% level at $55.72 will become the primary upside target.

Bearish Scenario

A sustained move under $53.95 will signal the presence of sellers. If the selling pressure increases then look for the move to extend into the short-term Fibonacci level at $53.14, followed closely by yesterday’s low at $52.96.

The low could be the trigger point for an acceleration to the downside with the August 7 bottom at $50.50 the next major downside target.