Crude Oil Price Update – Strong Rally Puts $103.16 – $106.68 Retracement Zone on Radar

U.S. West Texas intermediate crude oil futures are edging higher on Monday. The catalysts driving the rally are a weaker U.S. Dollar and tight supplies as concerns over gas supply from Russia mounted. Limiting gains are worries over demand, fueled by a possible recession and China lockdowns.

At 14:48 GMT, September WTI crude oil futures are trading $98.89, up $4.32 or +4.57%.  The United States Oil Fund ETF (USO) is at $77.16, up $3.42 or +4.64%.

Traders are focusing on the tight supply situation today because, as expected, U.S. President Joe Biden’s trip to Saudi Arabia failed to yield any pledge from the top OPEC producer to boost oil supply.

Biden was hoping he could persuade Gulf oil producers to step up output to help lower oil prices and drive down inflation.

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 minor range is $102.00 to $88.23. The market is currently trading on the strong side of its retracement zone at $96.74 to $95.12, making it support.

The short-term range is $111.14 to $88.23. Its 50% level at $99.69 is resistance.

The intermediate range is $118.08 to $88.23. If the main trend changes to up then look for a surge into its retracement zone at $103.16 to $106.68.

On the downside, the major support is the long-term retracement zone at $89.54 to $82.80. This zone stopped the selling at $88.23 on July 14.

Daily Swing Chart Technical Forecast

Trader reaction to $99.69 is likely to determine the direction of September WTI crude oil futures into the close on Monday.

Bullish Scenario

A sustained move over $99.69 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the main top at $102.00. Taking out this level will change the main trend to up, with $103.16 to $106.68 the next major target.

Bearish Scenario

A sustained move under $99.69 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the minor retracement zone at $96.74 to $95.12.

If $95.12 fails as support, we could see a retest of $89.54 to $88.23.