WTI Crude Oil Price Analysis for July 8, 2020

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WTI crude oil is trending higher inside a short-term rising channel connecting the higher lows and higher highs on the 1-hour chart. Price just bounced off support and found resistance at the mid-channel area of interest.

Another test of the channel bottom might be underway from here, but technical indicators suggest that support is more likely to hold than to break. The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside, but price is dipping below the dynamic inflection point to reflect a bit of selling pressure.

RSI is treading sideways to indicate consolidation while stochastic is moving down to suggest that sellers have the upper hand. Once the oscillator reaches the oversold region and turns higher, bullish momentum could pick up.

In that case, crude oil could bounce above the mid-channel area of interest and onto the channel top at $41.50 per barrel. A break below support around $40.50 per barrel, on the other hand, could mean a reversal from the climb.

WTI crude oil is under downside pressure on account of risk-off flows stemming from fears of another wave of the pandemic. US states like Texas and Florida have been reporting an increasing amount of confirmed cases for the past week, potentially spurring more restrictions on trade and travel.

If so, demand for energy and fuel could wane, weighing heavily on crude oil purchases and keeping supply elevated. Traders could still hold out for the release of the API and EIA crude oil inventories data this week to see how demand and supply conditions are faring.

A reduction of 3.2 million barrels in stockpiles is expected from the Energy Information Administration, slower than the earlier 7.2 million draw but still a drop in supply nonetheless. A surprise build, however, could revive oversupply concerns.

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