Crude Oil Price Update – Decision Time: Straddling Pair of Key 50% Levels

March West Texas Intermediate crude oil futures are trading slightly higher shortly before the regular session opening. Volume is light and the range tight. Indicating investor indecision and impending volatility. Traders appear to be indecisive as the market straddles a pair of 50% levels.

Late Wednesday, the American Petroleum Institute reported a large draw of 5.121 million barrels of United States crude oil inventories for the week-ending January 12, marking seven large draws in seven weeks. This was higher than the 3.588 million barrel draw forecast.

The API also reported a build in gasoline inventories of 1.782 million barrels for the week-ending January 12. Analysts had expected a larger 3.596-million-barrel build.

Distillate inventories saw a build this week of 609,000 barrels. The forecast was for a 750,000 barrel draw.

Later today at 1600 GMT, the EIA will report its inventories data. It is expected to show a 1.4 million barrel draw. (Note the change in the time.)

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, Tuesday’s closing price reversal top has stopped the upside momentum. This potentially bearish chart pattern often leads to a 2 to 3 day correction, or a 50% retracement of the last rally.

A trade through $64.74 will negate the reversal top and signal a resumption of the uptrend.

A move through $62.98 will change the minor trend to down. This may be the trigger point for an acceleration to the downside.

A major, long-term 50% level comes in at $64.11. This angle provided some resistance earlier.

The short-term range is $62.98 to $64.74. Its 50% level or pivot at $63.86 is controlling the short-term direction of the market. It has been providing support today.

Daily Technical Forecast

Based on the early trade, the direction of the crude oil market today is likely to be determined by trader reaction to $64.11 and $63.86.

A sustained move over $64.11 will indicate the presence of buyers. This could create the upside momentum needed to challenge $64.74.

A sustained move under $63.86 will signal the presence of sellers. A break through this level could lead to a test of $62.98.

If $62.98 fails as support then look for a possible acceleration into the uptrending Gann angle at $61.57.