Crude Oil Price Update – Bullish EIA Report Triggers Short-Covering RallyBased on the current price at $56.31, the direction of the January WTI crude oil market the rest of the session is likely to be determined by trader reaction to the support cluster at $56.17 to $56.08.
U.S. West Texas Intermediate crude oil futures are trading sharply higher on Wednesday, regaining more than half of its two-day loss after the U.S. government reported a smaller-than-expected build in weekly inventories. Prices were underpinned earlier in the session as Iran-related tensions escalated. The two events offset renewed worries over U.S.-China trade relations after President Trump threatened on Tuesday to raise tariffs on Chinese goods.
At 15:52 GMT, January WTI crude oil is trading $56.31, up $0.96 or +1.75%.
At 15:30 GMT, the U.S. Energy Information Administration (EIA) reported that crude inventories in the United States increased by 1.4 million barrels during the week-ending November 14. This matched trader expectations, but came in well-below the 6 million barrel build reported by the American Petroleum Institute late Tuesday. Nonetheless, the EIA news was read as bullish by traders, triggering a short-covering rally.
Over in the Middle East, the U.S. aircraft carrier strike group Abraham Lincoln on Tuesday sailed through the vital Strait of Hormuz, in a move that rattled Iranian leaders.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the last main bottom at $55.77. The main trend will change to up on a trade through $58.17.
The main range is $61.48 to $50.69. The market is currently testing its retracement zone at $56.08 to $57.36. This zone is controlling the longer-term direction of the WTI crude oil market.
The short-term range is $50.69 to $58.17. If the selling pressure resumes then its retracement zone at $54.43 to $53.55 will become the primary downside target.
Daily Technical Forecast
Based on the current price at $56.31, the direction of the January WTI crude oil market the rest of the session is likely to be determined by trader reaction to the support cluster at $56.17 to $56.08.
A sustained move over $56.17 will indicate the presence of buyers. If this continues to generate upside momentum then look for the buying to possibly extend into a downtrending Gann angle at $57.17, followed by the main Fibonacci level at $57.36.
A sustained move under $56.08 will signal the return of sellers. This could trigger a steep break into an uptrending Gann angle at $54.94. This angle stopped the selling on Tuesday. If it fails then look for the selling to possibly extend into the retracement zone at $54.43 to $53.55.