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July WTI Crude Oil Futures Retreat 9%

It’s been a wild day on Wall Street, with the COVID-19 “second-wave” dominating market sentiment. Among the hardest hit assets has been energy. July WTI crude oil futures are trending south, having posted an intrasession retracement of more than 9%. This is a huge move and one that has caught many in the markets by complete surprise.

At press time, July WTI is trading near the $36.50 handle, off almost $3.00 per barrel from Wednesday’s close. According to the fundamentals, this move should come as no shock. The weekly EIA stocks report came in at record levels, the FED projected a 6.5% decline in GDP for 2020, and COVID-19 infections appear to be on the rise. Given these three market drivers, it’s a wonder July WTI crude oil is hanging tough above $35.00 per barrel. 

July WTI Crude Oil Plunges 9%

Anytime a commodity moves up or down 9%, it’s a newsworthy event. That is exactly what we have seen today in July WTI crude oil futures ― a crash reminiscent of mid-April.  

July WTI Crude Oil Futures (CL), Daily Chart
July WTI Crude Oil Futures (CL), Daily Chart

Here are the key levels to watch for July WTI:

  • Support(1): Bollinger MP, $34.04
  • Support(2): Daily SMA, $32.32

Overview: Even the strongest rallies are tested. That is what we are seeing today in WTI crude oil ― a stiff retracement off exuberant highs. If the bearish action continues to close the week, a buying opportunity may come into play.

Until Friday’s closing bell, I’ll have buy orders queued up from $34.17. With an initial stop loss at $33.94, this trade produces 25 ticks on a better-than-1:1 risk vs reward ratio.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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