Crude Oil Price Update – Holding $65.83 Could Trigger Near-Term Rally into $70.83 – $72.81

U.S. West Texas Intermediate crude oil futures inched lower on Friday after giving back earlier gains. The U.S. benchmark ended little changed after wiping out gains of more than $2.00 per barrel on growing concerns that rising Delta and Omicron coronavirus cases could lead to renewed demand destruction. Comments from President Joe Biden suggesting China would release more oil from its Strategic Petroleum Reserve (SPR) also spooked weak longs into selling.

On Friday, January WTI crude oil futures settled at $66.26, down $0.24 or -0.36%. The United States Oil Fund (USO) ETF finished at $48.00, down $0.29 or -0.60%.

Crude oil prices edged higher early in the session after producer group OPEC+ said it could review its policy to hike output at short notice if a rising number of pandemic lockdowns chokes off demand.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher following the confirmation of Thursday’s closing price reversal bottom.

A trade through $62.43 will negate the chart pattern and signal a resumption of the downtrend. A move through $79.23 will change the main trend to up.

The minor trend is also down. The new minor bottom is $62.43.

The minor range is $62.43 to $69.22. Its retracement zone at $65.83 to $65.02 is potential support.

The short-term range is $79.23 to $62.43. Its retracement zone at $70.83 to $72.81 is the primary upside target.

On the downside, support is a pair of 50% levels at $61.04 and $57.93.

Short-Term Outlook

The direction of the January WTI crude oil futures contract early Monday is likely to be determined by trader reaction to $65.83 and $65.02.

Bullish Scenario

A sustained move over $65.83 will indicate the presence of buyers. The buying will come from aggressive counter-trend buyers trying to form a potentially bullish secondary higher bottom.

If this move is able to generate enough upside momentum then look for a retest of Friday’s high at $69.22. Overtaking this level will indicate the buying is getting stronger with $70.83 – $72.81 the next likely target area. Since the main trend is down, sellers could come in on the first test of this zone. They are going to try to form a secondary lower top.

Bearish Scenario

A sustained move under $65.02 will signal the presence of sellers. If this generates enough downside momentum then look for a retest of last week’s low at $62.43. If this fails then look for the selling to possibly extend the move into at least $61.04 to $60.77.