Crude Oil Price Update – Bulls Eyeing More-than-One-Year High at $57.41
U.S. West Texas Intermediate crude oil futures surged on Wednesday after a government report showed a drop in U.S. crude oil stockpiles. However, gains were likely limited by an unexpected jump in gasoline inventory.
The strength in the market indicates the oil market is looking forward to better days ahead as the number of coronavirus vaccinations continues to increase, creating an optimistic outlook for demand. Meanwhile, compliance with the OPEC+ plan to limit production is also causing worldwide inventories to decline.
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At 21:12 GMT, March WTI crude oil is trading $55.82, up $1.06 or +1.94%.
According to the U.S. Energy Information Administration (EIA), crude inventories fell by 994,000 barrels in the week to January 29 to 475.70 million barrels, their lowest since March. Analysts in a Reuters poll had forecast a 446,000-barrel rise.
U.S. gasoline stocks rose by 4.5 million barrels in the week to 252.2 million barrels, compared with analysts’ expectations for a 1.1 million-barrel rise.
Most importantly, crude stocks at the Cushing, Oklahoma, U.S. futures delivery hub, fell by 1.5 million barrels in the last week.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was confirmed early in the session when buyers took out yesterday’s high. A trade through $51.64 will change the main trend to down.
Due to the steep, two-day rally, investors should also start watching for the formation of a potentially bearish closing price reversal top.
The minor range is $51.64 to $56.33. Its retracement zone at $53.99 to $53.43 is support. This zone will move up as the market moves higher.
The short-term support is a pivot at $51.82. The main range is $46.30 to $56.33. Its retracement zone at $51.32 to $50.13 is the main support. It’s controlling the near-term direction of the market.
Short-Term Outlook
Unless there is a dramatic closing price reversal top that temporarily stalls the rally, March WTI crude oil appear to be headed toward the January 8, 2020 main top at $57.41. Sellers could come in on the first test of this level.
The formation of a closing price reversal top will not be a trend-changing event, but it will indicate the selling is greater than the buying at current price levels. This chart pattern would suggest the need for a short-term pullback into a support area.
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