Crude Oil Price Update – Main Trend Changes to Up on Trade Through $102.00

U.S. West Texas Intermediate crude oil futures closed higher on Tuesday as traders reacted to worries about tight supplies and a weaker U.S. Dollar. Traders also said a combination of low open interest and trading volume contributed to the surprise strength.

On Tuesday, September WTI crude oil futures settled at $100.74, up $1.32 or +1.33%. The United States Oil Fund ETF (USO) finished at $78.05, up $1.24 or +1.61%.

Oil price have been whip-sawed all month, at times, supported by supply fears due to Western sanctions on Russia, but also pressured by global central bank efforts to control inflation with aggressive rate hikes. These moves have stoked fears that a potential recession could cut energy demand.

Late in the session on Tuesday, the American Petroleum Institute (API) reported a build for crude oil of 1.860 million barrels, while analysts predicted a build of 333,000 barrels.

The API also reported a build in gasoline inventories this week of 1.290 million barrels for the week-ending July 15, compared to the previous week’s 2.927-million-barrel build.

Distillate stocks saw a draw of 2.153 million barrels for the week, compared to last week’s 3.262-million-barrel increase.

On Wednesday, the U.S. Energy Information Administration will report its weekly crude oil inventories at 14:30 GMT.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $102.00 will change the main trend to up. A move through $88.23 will signal a resumption of the downtrend.

The short-term range is $111.14 to $88.23. On Tuesday, the market closed on the strong side of its pivot at $99.69, making it support.

The intermediate range is $118.08 to $88.23. Its retracement zone at $103.16 to $106.68 is the next upside target and potential resistance.

The new minor range is $88.23 to $100.99, its retracement zone at $94.61 to $93.10 is the nearest support area.

Short-Term Outlook

Trader reaction to the short-term pivot at $99.69 is likely to determine the direction of the September WTI crude oil futures contract early Wednesday.

Bullish Scenario

A sustained move over $99.69 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for a surge into the main top at $102.00.

Taking out $102.00 will change the main trend to up. This could lead to a further test of the intermediate 50% level at $103.16. Taking out this level could trigger an acceleration into the intermediate Fibonacci level at $106.68.

Bearish Scenario

A sustained move under $99.59 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the minor retracement zone at $94.61 to $93.10.