Crude Oil Price Update – Next Target $53.60, but Will COVID-19 Concerns Slow the Move?

U.S. West Texas Intermediate crude oil futures rose on Tuesday, inching through $50 for the first time since February 2020 as OPEC+ reportedly reached an agreement to essentially roll over current production curbs into February, but with Saudi Arabia reportedly voluntarily taking on a larger reduction.

At 19:42 GMT, February WTI crude oil is trading $50.01, up $2.39 or +5.02%.

Prices jumped after The Wall Street Journal reported, citing officials familiar with negotiations, that OPEC+ will maintain output levels through February, delaying any increase until March. OPEC+ in December agreed to relax curbs by 500,000 barrels a day beginning on January 1 to 7.2 million barrels a day.

Saudi Arabia, however, will carry a greater burden of the oil-output cuts, as Russia and Kazakhstan are allowed to boost production in February by a combined 75,000 barrels a day, Bloomberg reported, citing comments from delegates.

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 yesterday’s closing price reversal top at $49.83. A trade through $47.18 will change the main trend to down.

The minor range is $46.16 to $50.20. Its 50% level at $48.18 is new support. This level will move up with each new high.

Short-Term Outlook

The daily chart indicates there is plenty of room to the upside with the next target the February 20, 2020 main top at $53.60. How the market will get there is likely to be determined by the impact of coronavirus.

If traders believe that OPEC+ has addressed the issue of lower demand due to the surge in COVID-19 cases then we’re likely to see a steady climb into that target.

If traders feel that OPEC+ has not done enough to offset expectations of lower demand then prices could drift lower until they reach a value area.

We’re looking for the upside bias to remain intact as long as the long-term Fibonacci level at $46.04 remains intact. However, we’re not so sure that buyers will be willing to chase prices higher at current price levels.