West Texas Intermediate (WTI) US crude Oil prices trade with a mild positive bias, just above the $69.00/barrel mark during the early European session on Thursday, albeit lack bullish conviction. The commodity remains well within the striking distance of the YTD low, around the $68.45 region touched the previous day and seems vulnerable to prolonging its downtrend witnessed over the past two months or so. 

Reports that OPEC+ is discussing delaying its oil output increase scheduled to start in October turn out to be a key factor lending some support to Crude Oil prices. Apart from this, a subdued US Dollar (USD) demand further benefits the USD-denominated commodity. That said, persistent demand worries in China – the world's largest oil importer – and renewed fears about an economic downturn in the US act as a headwind for the commodity. This, along with a bearish technical setup, warrants some caution before confirming that the black liquid has formed a near-term bottom. 

Crude Oil prices have been trending lower along a downward-sloping channel since early Jul. Adding to this, the commodity this week broke down through the $71.50 horizontal support. Furthermore, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for the commodity is to the downside and any meaningful recovery attempt is likely to get sold into, making it prudent to wait for strong follow-through buying before positioning for a further appreciating move. 

From current levels, the $69.80 region, closely followed by the $70.00 psychological mark, might act as an immediate hurdle ahead of the overnight swing high, just below the $71.00 round figure. The subsequent move up could confront a stiff barrier and remain capped near the aforementioned support breakpoint, now turned resistance, near the $71.50 horizontal zone. The latter should act as a key pivotal point, which if cleared decisively should trigger a short-covering rally, which should allow Crude Oil prices to surpass the $72.50 intermediate resistance and aim to reclaim the $73.00 mark.

On the flip side, the YTD low, around the $68.45 region, could protect the immediate downside ahead of the $68.00 mark and the descending channel support, currently pegged near the $67.70-$67.65 area. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag Crude Oil prices to sub-$67.00 levels, or June 2023 swing low.

WTI daily chart

(Click on image to enlarge)

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