Crude Oil Price Update – Main Trend Up, Minor Trend Down; Taking Out $73.70 Signals Resumption of Uptrend

U.S. West Texas Intermediate crude oil futures are trading flat late in the session on Wednesday despite a government report showing U.S. crude stockpiles fell for a sixth straight week and an OPEC report that predicted an undersupplied market this year.

The muted price action is likely being fueled by caution ahead of Thursday’s OPEC+ production decision. Investors are predicting, OPEC and its allies are going to raise output in August in order to prevent runaway prices.

At 20:11 GMT, September WTI crude oil is trading $72.78, up $0.47 or +0.65%.

U.S. crude stocks fell for the sixth straight week as refiners ramped up output in response to rising demand, the Energy Information Administration said on Wednesday.

Crude inventories fell by 6.7 million barrels in the week to June 25 to 452.3 million barrels, a steeper drop than the 4.7 million barrels expected by analysts in a Reuters poll. Gasoline production rose to 9.6 million bpd, as the four-week average of product supplied came in at nearly 20 million bpd, another signal of improved U.S. demand for fuel. Distillate stockpiles, which include diesel and heating oil, fell by 869,000 barrels versus expectations for a 486,000-barrel rise.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted lower on June 28. A trade through $73.70 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $61.06 will change the main trend to down.

The minor trend is down. This confirmed the shift in momentum. A trade through $71.28 will reaffirm the downtrend.

The minor range is $73.70 to $71.28. The market is currently trading on the strong side of its pivot at $72.49, making it support.

The second minor range is $68.86 to $73.70. Its pivot comes in at $71.28. This is followed by another pivot at $70.77. The latter is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The direction of the September WTI crude oil futures contract into the close on Wednesday is likely to be determined by trader reaction to $72.49.

Bullish Scenario

A sustained move over $72.49 will indicate the presence of buyers. If this move is able to create enough late session momentum then look for a move into $73.70. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $72.49 will signal the presence of sellers. This could trigger a short-term break into $71.28, followed by $70.77. The latter is a potential trigger point for an acceleration into $69.15.

Side Notes

Although traders expect OPEC+ to increase production in August, the actual news could be the source of volatility so be prepared for two-sided price action.