Crude Oil Price Update – Taking Out $100.99 Will Change the Main Trend to Up

U.S. West Texas Intermediate crude oil futures are trading higher for a second session on Tuesday on renewed worries over tight supplies in Europe after Russia, a major oil and gas supplier in the region, cut off the gas supply via a major pipeline, Reuters reported.

According to Reuters, Russia tightened its gas squeeze on Europe as Gazprom said supply through the Nord Stream 1 gas pipeline to Germany would fall to just 20% of capacity.

At 10:25 GMT, September WTI crude oil futures are trading $98.07, up $1.37 or +1.42%. On Monday, the United States Oil Fund ETF (USO) settled at $76.20, up $1.67 or +2.24%.

This is a major problem for Germany but potentially bullish for crude oil. The move by Russia will prevent Germany from meeting its targets for recharging natural gas storage before the winter demand period, and could encourage end users to swap their gas for petroleum products, especially diesel. The shift to crude oil will support oil prices.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $100.99 will change the main trend to up. A move through $88.23 will signal a resumption of the downtrend.

The minor trend is also down. A new minor bottom was formed at $93.01. This could turn into a new secondary higher bottom later this week.

On the downside, support is a minor 50% level at $97.00, followed by a retracement zone at $94.61 to $93.10. This zone stopped the selling at $93.01 on Monday.

On the upside, the first resistance is a 50% level at $99.69. The intermediate retracement zone at $103.16 to $106.68 is the next resistance target.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at $97.00 is likely to determine the direction of the September WTI crude oil market on Tuesday.

Bullish Scenario

A sustained move over $97.00 will indicate the presence of buyers. The first target is a 50% level at $99.69, followed by a pair of main tops at $100.99 and $102.00.

Taking out the main tops will change the main trend to up. This could create the upside momentum needed to challenge the retracement zone at $103.16 to $106.68.

Bearish Scenario

A sustained move under $97.00 will signal the presence of sellers. This could trigger a quick break into $94.61 to $93.10.