Crude Oil Price Update – Strengthens Over $56.42, Weakens Under $56.31; Look for EIA Report Volatility

Crude oil futures are trading higher shortly after the regular session opening and ahead of today’s U.S. Energy Information Administration’s (EIA) weekly inventories report, due to be released at 15:30 GMT. Today’s rally is being supported by yesterday’s American Petroleum Institute’s (API) weekly inventories report, which showed an unexpected 4.2 million barrel draw for the week-ending February 22.

At 13:39 GMT, April WTI crude oil is trading $56.68, up $1.18 or +2.14%.

Prices are being further supported by OPEC’s decision to stick with its plan to reduce production and trim global supplies despite pressure from U.S. President Donald Trump to curtail the strategy.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $57.81 will signal a resumption of the uptrend.

The minor trend is also up. A new minor bottom was formed at $55.02 earlier in the session. A trade through this level will change the minor trend to down.

The minor range is $57.81 to $55.02. Its 50% level or pivot is controlling the direction of the market on Wednesday. Trading above this level is helping to generate an upside bias.

The main range is $51.62 to $57.81. If the minor trend changes to down then look for a break into its retracement zone at $54.72 to $53.98.

Daily Technical Forecast

Based on the early price action, the direction of the April WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to the pivot at $56.42 and the downtrending Gann angle at $56.31.

Bullish Scenario

A sustained move over $56.42 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to extend into a pair of Gann angles at $57.06 and $57.12.

Crossing to the strong side of the angle at $57.12 could trigger an extension of the rally into a pair of downtrending Gann angles at $57.44 and $57.62. The latter is the last potential resistance angle before the $57.81 main top.

Bearish Scenario

Crossing to the weak side of the downtrending Gann angle at $57.12 will signal the presence of sellers. The daily chart is wide open under this angle with the next downside targets the minor bottom at $55.02 or the main 50% level at $54.72.

Look for volatility at 15:30 GMT with the release of the EIA report. It is expected to show a build of 2.8 million barrels. However, there could be a surprise draw.