After inventory data that showed a much bigger-than-expected reduction in crude supplies but a much bigger-than-expected increase in gasoline stocks, nearby NYMEX oil prices remain under a bit of pressure today (-$1.35).

Purely from a technical perspective, let's notice that all of the action off of yesterday's recovery high at 90.52 appears to be carving out a sideways coil-type pattern that has intraday coordinates at 88.76 and 88.53.

If oil breaks both of those price levels, it should press considerably lower, towards 88.00-87.80 initially on the way to 86.80/30 thereafter -- bearish for ETF traders of the U.S. Oil Fund ETF (USO).

Conversely, only a rally that hurdles 89.90-90.00 will increase the likelihood that nearby oil could be making a run at 91.00-92.00, which also happens to be the area of the down trendline off of the May high.

Update: In the minutes after we posted this chart, oil has since violated the lower coordinates of the near-term coil pattern, and as such should be heading towards 88.00-87.80 next. Last is 88.47/48.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.