Crude Oil Price Update – Set Up for Short-Term Test of $62.29 – $63.47 Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading higher on Wednesday shortly before the regular session opening. The rally is being fueled by the news that OPEC raised its outlook for oil demand and an industry report that showed U.S. inventories declined more than expected. Despite the potentially bullish news, some traders feel gains could be limited by COVID-related demand worries and rising supplies.

At 09:38 GMT, June WTI crude oil futures are trading $61.31, up $1.07 or +1.78%.

A report released late Tuesday by the American Petroleum Institute (API) showed crude stocks fell by 3.6 million barrels in the week ended April 9, compared with estimates for a decline of about 2.9 million barrels from analysts polled by Reuters.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $66.15 will change the main trend to up. A move through $57.29 will signal a resumption of the downtrend.

The minor trend is also down. The minor trend changes to up on a move through $61.75. This will shift momentum to the upside. Taking out the next minor top at $62.22 will reaffirm the minor trend.

On the downside, the nearest support is a 50% level at $59.75, followed by the main retracement zone at $59.17 to $57.25. This zone is controlling the near-term direction of the market.

The first short-term range is $66.15 to $57.29. Its 50% level comes in at $61.72.

The second short-term range is $67.29 to $57.29. Its retracement zone at $62.29 to $63.47 is the primary upside target. Since the trend is down, sellers could come in on a test of this area. They will be trying to form a potentially bearish secondary lower top.

Daily Swing Chart Technical Forecast

The early upside momentum suggests the market is headed into the 50% level at $61.72. The direction the rest of the session will be determined by trader reaction to this level.

Bullish Scenario

A sustained move over $61.72 will indicate the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend over the minor tops at $61.75 and $62.22 and the 50% level at $62.29. The latter is a potential trigger point for an acceleration into $63.47.

Bearish Scenario

A sustained move under $61.72 will indicate the buying is lightening up and the selling may be getting stronger. If this creates enough downside momentum then look for the selling to possibly extend into a pair of 50% levels at $59.75 and $59.17.

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