Crude Oil Price Update – Rallies on Bullish EIA Report; Trade Through $57.13 Changes Trend to Up

U.S. West Texas Intermediate crude oil futures are trading sharply higher at the mid-session on Wednesday after U.S. government data showed a bigger than expected drop in weekly U.S. crude inventories. The news helped ease worries about weakening oil demand growth caused by the escalating U.S.-China trade war.

The U.S. Energy Information Administration said on Wednesday that U.S. crude inventories fell last week by 10 million barrels, compared with analysts’ expectations for a drawdown of 2.1 million barrels, as imports slowed.

At 16:05 GMT, October WTI crude oil is trading $55.96, up $1.03 or +1.86%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $57.13 will change the main trend to up. A move through $52.96 will signal a resumption of the downtrend.

The main range is $60.93 to $50.50. Its retracement zone at $55.72 to $56.95 is currently being tested. This zone is controlling the near-term direction of the market.

The short-term range is $50.50 to $57.40. Its retracement zone at $53.95 to $53.14 is support. This zone stopped the selling at $52.96 on August 26.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $55.96, the direction of the October WTI crude oil futures contract the rest of the session on Wednesday is likely to be determined by trader reaction to the main 50% level at $55.72.

Bullish Scenario

A sustained move over $55.72 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the high of the session at $56.75, followed by the main Fibonacci level at $56.95 and a pair of tops at $57.13 and $57.40. Taking out these levels will change the main trend to up.

Bearish Scenario

A sustained move under $55.72 will signal the presence of sellers. This could lead to a test of the minor pivot at $54.86. If this level fails then look for the selling to possibly extend into the short-term 50% level at $53.95.