Crude Oil Price Update – Next Big Challenge for Traders is $59.58 – $57.64 Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading nearly flat on Wednesday, following the release of a mixed weekly inventories report from industry group the American Petroleum Institute (API). Traders are also positioning themselves ahead of Thursday’s OPEC+ policy meeting. Meanwhile, rising COVID-19 cases in Europe and fresh lockdowns are raising concerns over demand recovery.

At 08:45 GMT, May WTI crude oil futures are trading $60.56, up $0.01 or +0.02%.

According to the API, U.S. crude oil stocks rose and gasoline inventories fell in the most recent week. Crude inventories swelled by 3.9 million barrels in the week to March 26, compared with analysts’ expectations in a Reuters’ poll for a build of about 100,000 barrels, sources said.

Gasoline stocks fell by 6 million barrels, compared with expectations for a rise of 700,000 barrels. Distillate fuel inventories rose by about 2.6 million barrels, versus expectations for an increase of 200,000 barrels.

At 14:30 GMT, the Energy Information Administration will release its weekly inventories report. Traders are looking for a crude oil draw of 1.3 million barrels.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $57.25 will signal a resumption of the downtrend. The main trend changes to up on a move through $66.44.

The main range is $51.37 to $67.79. Its retracement zone at $59.58 to $57.64 is support. This zone stopped the selling several times last week.

The minor range is $66.44 to $57.25. Its 50% level at $61.85 is resistance.

The short-term range is $67.79 to $57.25. Its retracement zone at $62.52 to $63.76 is potential resistance. Since the main trend is down, sellers are likely to return on a test of this area.

Daily Swing Chart Technical Forecast

The early price action suggests a neutral tone early in the session as traders await the next catalyst.

Bearish Scenario

If the downside momentum continues then look for traders to drive the market into $59.58 to $57.64. Aggressive counter-trend buyers could come in on a test of this area.

Bullish Scenario

Counter-trend buyers could gain control after the release of the EIA inventories report, but they are going to have to battle potential resistance at $61.85, $62.52 and $63.76 before we can seriously think about an upside breakout.