Crude Oil Price Update – March WTI Needs to Hold $76.74 to Sustain Upside Momentum

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Wednesday, extending gains even after OPEC+ producers stuck to an agreed daily output increase for February on Tuesday. Meanwhile, crude oil inventories dropped less than expected, but gasoline and distillate stockpiles jumped higher.

At 19:02 GMT, March WTI crude oil futures are trading $77.90, up $1.16 or +1.51%. The United States Oil Fund ETF (USO) is at $56.30, up $0.71 or +1.28%.

According to the U.S. Energy Information Administration (EIA) in a report released Wednesday morning, U.S. crude stocks dropped by 2.1 million barrels. This was less than the 3.5 million draw estimate. Traders blamed part of the selling on tax incentives for producers to reduce inventories before year-end.

However, gasoline inventories jumped by more than 10 million barrels, and stocks of distillates rose by 4.4 million barrels. Analysts cited soft demand during the last week of 2021 as people hunkered down due to the Omicron variant of the coronavirus.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the November 24 main top at $77.85. A trade through the intraday high at $78.16 will signal a resumption of the uptrend. A move through $74.01 will change the main trend to down.

The main range is $80.72 to $62.05. Its retracement zone at $73.59 to $71.39 is support. This area is controlling the near-term direction of the market.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil futures contract into the close on Wednesday is likely to be determined by trader reaction to $76.74.

Bullish Scenario

A sustained move over $76.74 will indicate the presence of buyers. Taking out the intraday high at $78.16 will indicate the buying is getting stronger. If this creates enough upside momentum then look for a surge into the October 26 main top at $80.72 over the near-term.

Bearish Scenario

A sustained move under $76.74 will signal the presence of sellers. A close under this level will form a potentially bearish closing price reversal top. If this chart pattern is confirmed then look for a 2 to 3 day correction.

The trend will change to down on a move through $74.01, but buyers could re-emerge on a test of $73.59 to $71.39.