Bullish WTI Oil Tone Resumes on Sustained Move Over $123.02

U.S. West Texas Intermediate crude oil futures are edging higher on Tuesday as speculative bulls tracked the possibility of formal U.S. sanctions against Russian oil exports.

Concerns over supply have been supporting prices throughout the session after sources told Reuters the United States, the world’s biggest oil consumer, may ban Russian oil imports in the wake of Russia’s invasion of Ukraine on February 24. Additionally, Reuters is reporting that the U.S. is willing to take this step without the involvement of European allies.

At 12:10 GMT, April WTI crude oil is trading $122.81, up $3.41 or +2.86%. On Monday, the United States Oil Fund ETF (USO) settled at $82.40, up $2.94 or +3.70%.

An apparent slowdown in talks with Iran over its nuclear program, which would end sanctions against its oil sales, added further price support. The European Union envoy in the talks said it was up to Iran and the U.S. to make political decisions to reach a deal.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $130.50 will signal a resumption of the uptrend. A move through $87.46 will change the main trend to down.

The minor trend is also up. A trade through $90.06 will change the minor trend to down. This will shift momentum to the downside.

The market is currently trading inside a long-term retracement zone with a 50% level at $111.45 support and a Fibonacci level at $136.92 the next major upside target.

Under $111.45 is minor pivot support at $110.28. This is followed by short-term retracement zone support at $108.98 to $103.90.

Short-Term Outlook

The direction of the April WTI crude oil market on Tuesday is likely to be determined by trader reaction to $123.02.

Bullish Scenario

A sustained move over $123.02 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into yesterday’s high at $130.50.

Taking out $130.50 could trigger an acceleration into the Long-Term Fibonacci level at $136.92. This is another potential trigger point for an acceleration to the upside with $150.00 the next target.

Bearish Scenario

The inability to overcome $123.02 will indicate that traders are being cautious about chasing the market higher and may be looking for value.

A drop in prices to the Long-Term 50% support at $111.45, the minor pivot at $110.28 or the support zone at $108.98 to $103.90 will support our assessment that buyers are looking for value.