Crude Oil Price Update – Bullish EIA Report Shifts Intraday Momentum to Up with $70.90 Potential Target

U.S. West Texas Intermediate crude oil futures are down at the mid-session on Wednesday but bouncing off their lows after a government report showed U.S. crude oil stockpiles fell more than anticipated last week and fuel inventories fell unexpectedly as implied consumer demand surged to an all-time high.

Despite the potentially bullish news from the Energy Information Administration (EIA), gains were likely being limited on growing signs that supply growth will outpace demand next year, and as World Health Organization (WHO) said COVID-19 vaccines may be less effective against the Omicron variant.

At 17:20 GMT, March WTI crude oil futures are trading $69.86, down $0.40 or -0.57%. This is up from an intraday low of $68.98. The United States Oil Fund ETF (USO) is at $50.83, down $0.09 or -0.18%. Its low for the session is $50.25.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $72.82 will change the main trend to up. A move through the nearest main bottom at $62.05 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $72.55 will change the minor trend to up. This will shift momentum to the upside.

The main range is $80.72 to $62.05. Its retracement zone at $71.39 to $73.59 is resistance. This zone stopped the selling at $72.82 on December 9.

The short-term range is $62.05 to $72.82. Its retracement zone at $67.44 to $66.17 is the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil futures contract into the close on Wednesday is likely to be determined by trader reaction to $70.26.

Bearish Scenario

A sustained move under $70.26 will indicate the presence of sellers. Taking out the intraday low at $68.98 will indicate the selling pressure is getting stronger. This could trigger an acceleration into the short-term retracement zone at $67.44 to $66.17.

Trader reaction to this zone is likely to determine the near-term direction of the market. Aggressive counter-trend buyers are going to try to form a potentially bullish secondary higher bottom. Trend trading sellers are going to try to drive the market through $66.17.

Bullish Scenario

A sustained move over $70.26 will signal the presence of buyers. If this creates enough late session upside momentum then look for a drive into $71.39. Since the main trend is down, sellers could come in on the first test of this level.

Overtaking $71.39 will indicate the buying is getting stronger. This could drive the market into other potential resistance levels at $72.55, $72.82 and $73.59.

The Fibonacci level at $73.59 is a potential trigger point for an acceleration to the upside.