Crude Oil Price Update – Bullish EIA Report Could Launch Breakout Over $58.74

U.S. West Texas Intermediate crude oil futures are trading lower shortly before the release of the government weekly inventories report at 15:30 GMT. Traders are looking for a draw of about 500,000-barrels.

On Wednesday, prices are being supported by optimism over a possible U.S.-China trade deal. This is offsetting an unexpected rise in U.S. crude inventories, according to an industry report released late Tuesday.

The American Petroleum Institute (API) said U.S. crude inventories rose by 3.6 million barrels, compared with analysts’ expectations for a decrease. If the EIA numbers are similar to the API data, then prices are likely to feel downside pressure. A bigger-than-expected inventory decline should be bullish for crude oil.

At 15:15 GMT, January WTI crude oil is trading $58.26, down $0.15 or -0.24%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $58.74 will reaffirm the uptrend. The main trend will change to down on a trade through $54.85.

The minor trend is also up. A trade through $57.21 will change the minor trend to down. This will shift momentum to the downside.

The main range is $61.48 to $50.69. It is also trading on the strong side of its retracement zone at $57.36 to $56.08, helping to generate an upside bias. This zone is new support.

Daily Technical Forecast

Based on the early price action and the current price at $58.26, the direction of the January WTI crude oil market the rest of the session on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at $58.23.

Bullish Scenario

A sustained move over $58.23 will indicate the presence of buyers. If this move creates enough upside momentum, then look for a rally into $58.74.

Taking out $58.74 could trigger an acceleration to the upside with the next target angle coming in at $59.86.

Bearish Scenario

A sustained move under $58.23 will signal the presence of sellers. This could trigger an acceleration to the downside with $57.36 the next downside target, followed by the minor bottom at $57.21 and the minor 50% level at $56.80.