Oil prices have fallen nearly 10% since the July high. OPEC’s increased output and hopes that talks between Trump and Putin could result in lower oil sanction on Russia have helped weigh on crude oil, and price action on the weekly chart suggests there could be more downside to follow before a cycle low is set.
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WTI Crude Oil Futures (CL) Technical Analysis, COT Positioning
WTI crude oil futures have been range-bound for the past two and a half years, trading between $50 and $80. Over the past 18 months, price action has been confined to a tighter $57–$75 band.
Momentum is now turning bearish. A pronounced bearish engulfing week marked a key top and a false breakout above $75. A potential bear flag has also formed around the 200-week moving averages. With WTI crude oil futures now trading below both the 200-week SMA and EMA, positioned in the lower half of the range, and momentum pointing lower, the technical outlook suggests scope for further downside — with $60 as a potential target.
Chart analysis by Matt Simpson, Source: TradingView, ICE Futures, WTI Crude Oil
WTI Crude Oil Futures (CL) Daily chart
WTI crude has just posted its most bearish streak since August 2021, with seven straight daily losses culminating in Friday’s doji low. This pattern raises the probability of at least a short-term rebound. Adding to the case, the daily RSI (2) is curling higher from oversold territory, while Monday formed a bullish inside day just beneath the 200-day averages.
My near-term bias is for a bounce toward the weekly volume point of control (VPOC) at $65.56. A break above this level would bring the monthly pivot point near $68 into focus. However, with the weekly chart still pointing lower, the broader strategy is to look for signs of a swing high on the daily timeframe — should prices rally as expected — to align with the longer-term bearish outlook.
Chart analysis by Matt Simpson, Source: TradingView, ICE Futures, WTI Crude Oil
WTI Crude Oil Positioning (CL): Weekly COT Report Analysis
Net-long exposure among large speculators has dropped to a 17-week low, driven by a surge in short positions against crude oil. Gross shorts have been trending higher since mid-May, while gross longs remain relatively subdued — sitting at roughly half the level of gross shorts.
Although this setup is not particularly bullish in the near term, it is interesting to note that net-long exposure has rarely stayed below 150,000 contracts over the past 15 years. With gross longs now approaching their 2025 peak set in April, there remains a mild risk of a sentiment extreme forming.
This doesn’t justify a strong bullish case just yet, but traders may want to be cautious about assuming much lower prices from here. Though a move to $60 still remains a plausible path.
Chart analysis by Matt Simpson - Source: CME, LSEG
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-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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