Crude Oil Price Update – Needs to Hold $57.97 on the Close; API Data Expected to Show 1M Barrel Build

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Tuesday, shortly before the release of the American Petroleum Institute’s (API) weekly inventories report at 21:30 GMT.

U.S. crude oil inventories have fallen to their lowest since March, before the pandemic crushed the oil markets. Analysts in a Reuters poll, however, forecast a 1 million-barrel build last week.

At 20:53 GMT, March WTI crude oil futures are trading $58.32, up $0.35 or +0.60%.

Signaling tightening supplies in the world’s top oil producer, the U.S. government on Tuesday lowered its outlook for crude oil production in 2021 to 11.02 million barrels per day from 11.1 million bpd previously forecast.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Tuesday when buyers took out the previous day’s high. However, the rally stopped slightly below the April 23, 2019 main top at $58.95. This price is a potential trigger point for the start of another $4 to $5 rally.

The minor range is $51.64 to $58.62. Its retracement zone at $55.13 to $54.31 is the nearest support zone.

Short-Term Outlook

Given the prolonged rally in terms of price and time, the direction of the March WTI crude oil futures contract into the close is likely to be determined by trader reaction to Monday’s close at $57.97.

Bullish Scenario

A sustained move over $57.97 will indicate the buying is still strong at current price levels. This could trigger a retest of the intraday high at $58.62. Taking out this level could drive the price into $58.95.

Taking out $58.95 could fuel an acceleration to the upside or the start of another prolonged rally into $62.72. It all depends on how much buying volume comes in on the breakout move.

Bearish Scenario

A sustained move under $57.97 will signal the presence of sellers. A close under this level will form a potentially bearish closing price reversal top. If confirmed, the market could begin a 2 to 3 day correction with $55.13 to $54.31 the next potential downside target.

For a look at all of today’s economic events, check out our economic calendar.