Crude Oil Edges Downward
West Texas Intermediate (WTI) and Brent crude oil finished lower again Wednesday, weighed down in part by the prospect of new U.S. tariffs on Chinese goods and the effect they would have on demand.
The August WTI contract settled at $56.78 per barrel Wednesday, reflecting an 84-cent decline. The light crude benchmark peaked at $58.36 and bottomed out at $56.61.
“Since last week the August WTI futures tested the $61.00 major resistance twice – July 11 and July 15 – before breaking down and closing below the $59.93 support level seen on the daily chart,” said Steve Blair, senior account executive with the RCG Division of Marex Spectron.
Blair also noted the market closed Tuesday below the downtrend line on the daily chart that it had penetrated to the upside on July 10. He explained that indicates the possibility of additional downside action with support down at the $56.04 – as seen on the daily and daily continuation charts.
“A breakdown and close below this support could see the market have further downside potential to the $54.65 to $54.70 level,” Blair said.
Brent crude for September delivery lost 69 cents to end the day at $63.66 per barrel.
“September Brent tested some resistance levels at $67.65 and $67.47 last week and early this week against a downtrend line of resistance as seen on the daily chart,” said Blair. “Prices failed substantially yesterday closing at $64.35, which was just above the support level at $64.11. Some minor support seen at the $63.98 level but much better and major support seen at the $62.82 level, which stems back to this past January and early February price action.”
Reformulated gasoline (RBOB) futures also finished lower Wednesday. August RBOB shed one penny to settle at $1.88 per gallon. Blair noted that August RBOB last week penetrated and closed above a longstanding downtrend line of resistance, rallying nearly 10 cents once that penetration had occurred.
“However, the very next day the market had a key technical reversal when prices moved higher than the close and then settled lower than the previous day’s settlement price,” he continued. “Prices have since moved back to the breakout level and more with prices looking for the next major support seen at the 1.8566 level.”
Blair added that resistance is seen at the $1.9287 level on the daily chart – the level on the downtrend line of resistance.
The August Henry Hub natural gas contract price lost just two-tenths of a cent to close at $2.30. Prior to July 10, gas futures had finally broken back out to the upside amid above-normal temperatures in the Midwest, Northeast and much of the remaining Lower 48 States, Blair said. He added that prices climbed to the $2.489 level, where they remained for two days before the market began descending back toward the $2.401 breakout level. The daily chart provided by Blair’s firm illustrates the recent price movement.
“Prices have continued to move lower on the back of the mid- to long-term weather forecasts – late-July and early August – and have returned to the lower congestion range bounded by the resistance at $2.307 and the support at $2.237, and it would not surprise if prices tested the downside support,” Blair said.
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