Crude Oil Price Update – Poised to Test Contract High at $116.43

U.S. West Texas Intermediate crude oil futures closed higher on Friday. Bullish traders faded early weakness to finish at the high of the session ahead of the long U.S. holiday weekend. The catalysts driving the strong price action were the prospect of a European Union (EU) ban on Russian oil, and rising hopes of increased demand for gasoline at the start of the U.S. summer driving season.

On Friday, July WTI crude oil futures settled at $115.07, up $0.98 or +0.86%. The United States Oil Fund ETF (USO) finished at $85.43, up $0.84 or +0.99%.

According to reports, European Council President Charles Michel said last week that he is confident that an EU-wide agreement on the next major package of sanctions against Russia can be reached before the council’s next meeting on May 30. It’s also been reported that Hungary is the main stumbling block in reaching a unanimous decision to place the ban on Russia energy products.

In the United States, bullish traders are hoping the start of the U.S. summer driving season and strong travel demand will help drive crude oil prices higher.

Retail prices in the U.S. have been hitting record highs for weeks as refineries grapple with a bottleneck that is contributing to the undersupplied market.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the March 7 top at $116.43 will reaffirm the uptrend. A move through $103.24 will change the main trend to down.

The minor trend is also up. A trade through $108.61 will change the minor trend to down. This will shift the momentum.

The first minor range is $108.61 to $115.30. Its pivot at $111.96 is the nearest support. The second minor range is $103.24 to $115.30. Its pivot at $109.27 is additional support. The two combine to form a strong support zone at $111.86 – $109.27.

The short-term range is $116.43 to $88.53. Its retracement zone at $105.77 to $102.48 is the major support controlling the near-term direction of the market.

Short-Term Outlook

Trader reaction to $115.30 and $115.07 will determine the direction of the July WTI crude oil futures market early Monday.

Bullish Scenario

A sustained move over $115.30 will indicate the presence of buyers. This could trigger a quick surge into $116.43.

Sellers could come in on the first test of $116.43 because it is the contract high, however, overcoming this level could trigger an acceleration into $121.17. This is the main top of the Nearby Futures Contract hit on March 7.

Bearish Scenario

A sustained move under $115.07 will suggest the presence of sellers. If this move creates enough short-term momentum then look for a pullback into the minor support cluster at $111.86 to $109.27.