WTI Crude Oil Analysis: Bears Eye Another Assault on $60

View related analysis:

WTI Crude Oil Futures (CL) market Positioning – COT Report

There are a few competing forces visible in the CME positioning data, which makes WTI’s next big move harder to decipher. While gross shorts have been trending higher in recent weeks while gross longs fell, net-long exposure is arguably oversold among traders who a predominantly always net long.

However, given the strong false break of $60 two weeks ago, I suspect prices will hold above $60 and drift up towards $70. But price action on the near term suggests bears want another crack at $60 first.

Gross short exposure among managed funds and large speculators has been trending slightly higher overall in recent weeks, though both sets of traders reduced short exposure last week (by a combined total of -13k contracts).
Gross longs have also been falling in recent weeks, though managed funds increased net-long exposure to WTI crude oil by 24k contracts.
Two weeks ago, large speculators were at their least bullish on WTI crude oil futures since December, while managed funds were at their least bullish since September 2023.
From this metric, bullish exposure could be seen as oversold, even if short positioning has been rising overall in recent weeks.

WTI Crude Oil Technical Analysis: Daily Chart

The sharp decline from the April high marks the second leg lower since crude oil topped out in January. However, the momentum during the second leg was notably stronger.

Subsequent price action has been volatile, and while prices have moved higher, bulls have made hard work of those gains. The overlapping nature of the daily candles could suggest this ‘rebound’ is corrective, especially as volumes are also lower.

A bearish outside/engulfing candle formed on Wednesday around $65, near a 61.8% Fibonacci retracement and the March low. The bias now is for at least a move down to $60, though note potential VPOC support levels at $59.62 and $60.64.

WTI Crude Oil Technical Analysis: 1-Hour Chart

The 1-hour chart shows crude oil prices have broken down from a rising wedge pattern. Such patterns can act as continuation patterns during a downtrend and generate bearish price objectives near the base – which in this case is around $54.50.

A bearish divergence also formed before momentum turned lower. Price action on the 1-hour chart also reveals a smaller flag pattern projecting a downside target just below $60.

While my bias remains for a move to $60, be on guard for volatility around this milestone level.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.