Crude Oil Price Update – Boosted by Strong Stock Market Performance, Tight Supplies

U.S. West Texas Intermediate crude oil futures are trading higher late Friday, boosted by solid gains in U.S. equity markets, as the focus shifted to tight supply conditions and next week’s OPEC+ meeting. At least for one day, traders are shrugging off demand concerns due to a possible recession.

At 18:20 GMT, August WTI crude oil is at $107.25, up $2.98 or +2.86%. The United States Oil Fund ETF (USO) is at $81.14, up $2.16 or +2.73%.

Despite rising concerns over recession, the price action suggests traders still expect to see high demand and tight supply throughout the summer. Last week’s reversal top and this week’s early sell-off were not trend changing events, but they did signal bullish traders are becoming concerned over a potential drop in global demand.

There was no inventories report from the U.S. Energy Information Administration (EIA) this week. It was postponed until next week. OPEC+ members will also meet next week, with traders expecting the major producers to stick with their plan to increase output by 648,000 barrels a day in August.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $100.66 will change the main trend to down. A move through $120.88 will signal a resumption of the uptrend.

The minor trend is down. A trade through $116.58 will change the minor trend to up. A move through $101.53 will signal a resumption of the minor downtrend.

The main range is $86.81 to $120.88. Its retracement zone at $103.85 to $99.82 is support. This zone stopped the buying at $101.53 on June 22.

The minor range is $116.58 to $101.53. Its pivot at $109.06 is the first resistance. The short-term range is $120.88 to $101.53. Its retracement zone at $111.21 to $113.49 is the primary upside target.

Daily Swing Chart Technical Forecast

Trader reaction to $105.64 is likely to determine the direction of the August WTI crude oil market into the close on Friday.

Bullish Scenario

A sustained move over $105.64 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the minor pivot at $109.06. Overtaking this level will indicate the buying is getting stronger. This could trigger a further rally into the short-term retracement zone at $111.21 to $113.49.

Bearish Scenario

A sustained move under $105.64 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the main retracement zone at $103.85 to $99.82.

Side Notes

Trader reaction to $111.21 to $113.49 is likely to determine the near-term tone in the market. Aggressive counter-trend sellers are going to try to form a potentially bearish secondary lower top. Trend traders are going to try to trigger a breakout over $113.49.