WTI Price Analysis: Volatility contracts as focus shifts to US EIA oil inventory data

West Texas Intermediate (WTI), futures on NYMEX, have defended their immediate support of $70.50 in the Asian session. Earlier, the oil price slipped sharply as investors are worried that further postponement of approval for increasing the US debt-ceiling limit has deepened fears of a recession in the United States economy.

The US Dollar Index (DXY) is aiming to stretch its recovery above 102.70 as investors have turned cautious due to an absence of a meaningful outcome from US debt-ceiling negotiations.

On Wednesday, investors will keep an eye on the oil inventories data to be reported by the United States Energy Information Administration (EIA) for the week ending May 12.

Oil prices are auctioning in an Ascending Triangle chart pattern on an hourly scale, which indicates a sheer contraction in volatility.  The upward-sloping trendline of the chart pattern is placed from May 15 low at $69.39 while the horizontal resistance is plotted from May 12 high at $71.74. The black gold price is hovering near the upward-sloping trendline of the aforementioned pattern, advocating a downside bias.

The 20-period Exponential Moving Average (EMA) at $70.80 is stuck to the oil price, indicating a lackluster performance.

Also, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00, which signals that investors are awaiting a fresh trigger for further action.

Going forward, a breakdown of 15 low at $69.39 will strengthen the downside bias and will send the oil price to May 04 low at $67.47. A breakdown of the latter will further send the asset price toward a 17-month low at $64.31.

In an alternate scenario, a solid recovery above May 10 high at $73.80 will allow the asset for further upside towards May 02 high at $76.06. A breach of the latter will expose the asset to April 26 high around $78.00.

WTI hourly chart