WTI Crude Futures Intraday: Potential Signals of a Correction

Previously, we mentioned that over-optimism should be avoided, now there may be signs of a correction in oil prices...

Energy 1

WTI Crude Futures (August contract) plunged 5.9% to $38.01 yesterday, as sentiment was dragged down by a resurgence in coronavirus infections across the U.S. and a larger-than-expected build in U.S. crude oil inventory.

Source: EIA, Trading Economics

The U.S. Energy Information Administration (EIA) reported that crude oil inventory rose 1.44 million barrels, more than an increase of 0.30 million barrels estimated and it is the third consecutive week of worse than expectations.

Previously, we mentioned that despite there might be some more room for oil's rebound in the short term, over-optimism should be avoided. Now there may be signs of a correction in oil prices.

From an intraday point of view, WTI Crude Futures (August contract) is under pressure as shown on the 4-hour chart. There initial signs that a bullish channel drawn from early May might be broken, while the relative strength index continues to show a bearish divergence. Bearish investors might consider $39.80 as the nearest intraday resistance, with prices likely to test the 1st and 2nd support at $35.90 and $34.00 respectively. Alternatively, a break above $39.80 may trigger a revisit to the next resistance at $41.60.

Source: TradingView, Gain Capital

Build your confidence risk free

More from Crude Oil

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.