WTI Crude Strengthens Over $84.50, Weakens Under $84.00

U.S. West Texas Intermediate crude oil futures are edging higher on Tuesday, rebounding from yesterday’s loss, as growing tension in Eastern Europe and the Middle East raised concerns over possible supply disruptions in an already tight market.

Ahead of an expected U.S. Federal Reserve interest rate decision on Wednesday where a hike might weigh on prices, geopolitical risks involving oil and gas producer Russia have been supporting oil prices.

At 10:52 GMT, March WTI crude oil futures are trading $84.04, up $0.73 or +0.88%. On Monday, the United States Oil Fund ETF (USO) settled at $60.12, down $0.66 or -1.09%.

Supply concerns remained at the forefront after Yemen’s Houthi movement launched a missile attack at the United Arab Emirates on Monday. Meanwhile reports show that Russia and other producers, members of OPEC+, are struggling to reach their monthly output increase target of 400,000 barrels per day (bpd).

Later today at 21:30 GMT, the American Petroleum Institute (API) will release its weekly inventories data. Lower U.S. oil inventories are also providing support, with crude inventories at Cushing, Oklahoma at the lowest for the time of year since 2012.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $87.10 will signal a resumption of the uptrend. A move through $74.01 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through $86.09 will shift momentum back to the upside. A move through $81.90 will indicate the selling pressure is getting stronger.

The minor range is $87.10 to $81.90. Its 50% level or pivot at $84.50 is resistance.

Additional minor support levels come in at $82.22 and $80.56. The latter is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil market on Tuesday is likely to be determined by trader reaction to $84.50.

Bullish Scenario

A sustained move over $84.50 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into $86.09. Taking out this level will shift momentum to the upside with $87.10 and $88.18 the next upside targets.

Bearish Scenario

A sustained move under $84.50 will signal the presence of sellers. This could lead to a labored break with potential targets $82.22, $81.90 and $80.56.

A trade through $80.56 could trigger an acceleration to the downside with $77.34 to $76.52 the primary downside target zone.