Crude Oil Price Update – Could Run into Short-term Resistance at $66.16 and $66.89

March West Texas Intermediate crude oil futures spiked to the upside on Wednesday after government data showed the tenth straight weekly drop in U.S. stockpiles of crude oil.

According to the U.S. Energy Information Administration, U.S. commercial crude stockpiles fell by 1.1 million barrels in the week through January 19. Traders were looking for a 1 million barrel draw down. Total inventories now sit at 411.6 million barrels, the lowest since February 2015.

Daily Swing Chart Analysis

The main trend is up according to the daily swing chart. After a three day setback, the uptrend resumed when buyers took out the previous main top at $64.74.

A trade through $62.78 will change the main trend to down.

Daily Swing Chart Forecast

The contract range is $89.81 from July 7, 2014 to $38.40 from 01/21/16. Its 50% to 61.8% retracement zone is $64.11 to $70.17. The market is currently trading inside this zone. The 50% level at $64.11 is the support and the Fibonacci level at $70.17 is the main upside target.

Over the short-run, we’re looking for some resistance between $66.16 and $66.89.

Overcoming $66.89 could trigger an acceleration into the February 3, 2015 main top at $68.37.

If the June 10, 2015 top at $66.16 becomes resistance then we could form a range between this price and the contract 50% level at $64.11.

At this time, the momentum is strong because of increasing hedge fund buying. At the start of the week, we thought the market was saturated with buyers, but yesterday’s price action suggests there is still room to the upside.