WTI Crude Oil Outlook: Bearish Risks Build as Traders Trim Longs

View related analysis:

WTI Crude Oil Positioning (CL): Weekly COT Report Analysis

Managed funds and asset managers hold slightly opposing views on WTI crude oil futures. While both groups remain net-long, managed funds have trimmed their net-bullish positioning by approximately 20,000 contracts over the past two weeks, while large speculators have increased theirs by 10,000 contracts. Both sets of traders also reduced gross longs and shorts last week.

With no sentiment extreme to highlight and only marginal shifts in exposure, it hardly screams panic for WTI crude oil traders. However, the divergence in bullish positioning reflects a degree of uncertainty—and the lower volumes suggest a broader hesitancy to commit.

Still, the weekly charts remains in an apparent downtrend, which suggest another cycle low may not be out of the question. WTI crude oil may have already broken out of a bearish pattern on the monthly chart.

WTI Crude Oil Futures (CL) Technical Analysis

The weekly chart shows that a symmetrical triangle formed on WTI crude oil between May 2023 and March 2024. The near 2-Year pattern projects a downside target around $34. Whether it can reach such a grizzly level is questionable, unless the wheels really do fall of the global economy – or OPEC decide to significantly increase output.

Only time will tell, but a bearish setup may well be on the horizon, at least over the near term.

WTI Crude Oil Futures (Daily Chart)

The daily chart shows that WTI crude oil has rallied 17% from the false break of the 2023 low to Wednesday’s high. However, an elongated inverted hammer has formed, and several resistance levels are clustered in the area. Notably, WTI closed below the 50-day EMA (exponential moving average) after failing to hold an intraday break above it, while yesterday’s high also stalled around the March low. Additional resistance comes from the $50 level, the 61.8% Fibonacci retracement, and a descending triangle trendline—all converging in this zone.

Bears could look to fade into minor rallies towards the 50-day EMA at 60.74 or even the March high at 63.90.
The 59.40–60.00 support zone could serve as an initial downside target; a break beneath this area brings 58.00 and the daily opens around 57.20 into focus.
The bias remains bearish on the daily chart while prices trade beneath the double top near 64.30.
A break below 54.00 would suggest the next major leg lower is underway, keeping the higher-timeframe channel target of $34.00 in play.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. 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. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% 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. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. 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. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.