Crude Oil Price Update – Testing Retracement Zone; Strengthens Over $59.58, Weakens Under $57.64

U.S. West Texas Intermediate crude oil futures are edging higher on Wednesday as bargain hunters came in following a test of a value zone on the daily chart. Nonetheless, there may not be too much upside potential as traders point toward a slow recovery in demand due to new pandemic lockdowns in Europe and a build in U.S. crude stocks as reasons to expect further downside pressure.

At 08:58 GMT, May WTI crude oil futures are trading $58.92, up $1.16 or +2.01%.

Germany, Europe’s biggest oil consumer extended its lockdown to April 18, and Chancellor Angela Merkel urged citizens to stay home for five days over the Easter holiday.

Meanwhile, a report from the American Petroleum Institute (API) showed U.S. crude oil stocks jumped 2.9 million barrels in the week to March 19. Traders were looking for a decline of about 300,000 barrels.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $57.25 will reaffirm the downtrend. The main trend will change to up on a trade through $66.44. This is highly unlikely, but due to the prolonged move down in terms of price and time, the market is ripe for a potentially bullish closing price reversal bottom.

The main range is $51.37 to $67.79. The market is currently trading inside its retracement zone at $59.58 to $57.64. This zone is controlling the near-term direction of the market.

The first potential upside target is the 50% level at $61.85. This is followed by a retracement zone at $62.52 to $63.76.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the May WTI crude oil market will be determined by trader reaction to $57.64.

Bullish Scenario

A sustained move over $57.64 will indicate the presence of buyers. The first upside target is $59.58. Overcoming this level could trigger an acceleration to the upside with a pair of 50% levels at $61.85 and $62.52 the next likely upside target. Since the main trend is down, sellers are likely to come in on the first test of this area.

Bearish Scenario

A sustained move under $57.74 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with $51.37 the next major downside target.