Crude Oil Price Update – Trader Reaction to $12.38 Pivot Will Determine Next Short-Term Move

U.S. West Texas Intermediate crude oil futures are trading slightly lower at the mid-session after clawing back all of its earlier losses. Oil turned positive shortly after the regular session opening as reopening of economies outweighed fears about dwindling storage capacity worldwide.

Prices were under pressure for a second session after the United States Oil Fund (USO), said it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term deferred contracts.

At 15:46 GMT, June WTI crude oil is trading $11.63, down $1.30 or -5.38%.

The intraday rally was fueled by short-covering. It would be premature to hit the buy button given the current weak demand situation. According to some estimates, as much as a third of worldwide demand has been sapped, which has sent prices tumbling to record lows.

Daily June WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $6.50 will signal a resumption of the downtrend. The main trend will change to up on a move through $33.15. This is highly unlikely. It also shows how much work buyers are going to have to do to change the trend.

The minor range is $6.50 to $18.26. Its 50% level or pivot at $1238 is controlling the price action so far this week.

The short-term range is $33.15 to $6.50. Its retracement zone at $19.83 to $22.97 is the next upside target and resistance zone.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $11.63, the direction of the June WTI crude oil market the rest of the session on Tuesday is likely to be determined by trader reaction to the pivot at $12.38.

Bullish Scenario

A sustained move over $12.38 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into $18.26 to $19.83.

Bearish Scenario

A sustained move under $12.38 will signal the presence of sellers. If this move generates enough downside momentum then look for a possible retest of the contract low at $6.50.

Side Notes

At 20:30 GMT, traders will get the opportunity to react to the weekly inventories report from the American Petroleum Institute (API). It is expected to show a 12 to 15 million barrel build for the week-ending April 24. The previous week’s report showed a 13.226 million barrel build.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.