Crude Oil Price Update – Edging Closer to Main Objective at $63.45

U.S. West Texas Intermediate crude oil futures are trading higher on Wednesday, boosted by a bullish outlook for future demand amid news that the U.S. and China may be close to announcing a deal that would end the more-than-year-long trade dispute between the two economic powerhouses.

Continuing to underpin the market are the OPEC-led supply cuts and the U.S. sanctions against Iran and Venezuela. Additionally, the markets are being further supported by reports that the U.S. will stop issuing waivers to some countries still doing business with Iran. This will further tighten supply.

Later today at 14:30 GMT, the U.S. Energy Information Administration’s weekly storage report is expected to show a 700,000 barrel drawdown.

At 06:36 GMT, May WTI crude oil is trading $62.90, up $0.32 or +0.53%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The market isn’t close to changing the trend to down, but after seven days up, it is in the window of time for a potentially bearish closing price reversal top.

The next objective is the Fibonacci level at $63.45.

Daily Technical Forecast

Based on the early price action, if the upside momentum continues to build then look for buyers to make a run at $63.45.

If sellers come in then we could see a break into a steep uptrending Gann angle at $61.67.

Also pay attention to yesterday’s close at $62.88. An intraday break under this level will signal the start of a closing price reversal top. This won’t mean that the trend is changing, but it will indicate the selling is greater than the buying at current price levels. If confirmed, this could lead to a 2 to 3 day correction.

I’m not worried about a change in trend. The fundamentals are sound and supply is shrinking. Furthermore, the funds are long and they are likely to defend the trend on any near-term weakness.