WTI Crude Oil Outlook: Bearish Momentum Mounts, COT Data Sends Warning

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.

View related analysis:

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

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

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.