Crude Oil Price Update – Trend Changed to Up; $73.59 Next Trigger Point for Acceleration to Upside

U.S. West Texas Intermediate crude oil futures are inching higher early Thursday, following yesterday’s surge. Prices rose on Wednesday after a larger-than-expected drawdown in U.S. inventories, shaking off worries about the likely hit to economic activity from the spread of the Omicron coronavirus variant.

At 03:14 GMT, March WTI crude oil futures are trading $72.64, up $0.31 or +0.43%. On Wednesday, the United States Oil Fund ETF (USO) settled at $52.48, up $0.91 or +1.75%.

U.S. inventories fell more than expected, with crude oil stocks down by 4.7 million barrels, though that is in part due to year-end tax considerations that encourage companies not to store crude barrels.

Meanwhile, it is still unclear whether the Omicron variant is more deadly than Delta, the strain which has been dominant in recent months. Traders are viewing this news as optimistic and seizing upon the opportunity to cover recently implemented short positions.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up early Thursday when buyers took out the previous main top at $72.82. A move through $65.93 will change the main trend to down.

The main range is $80.72 to $62.05. The market is currently testing its retracement zone at $71.39 to $73.59. This zone is controlling the near-term direction of the market.

The minor range is $65.93 to $72.83. Its 50% level or pivot at $69.38 is new support.

The short-term range is $62.05 to $72.83, making its retracement zone at $67.44 to $66.17 the best support area.

Short-Term Outlook

The short-term direction of the March WTI crude oil market is likely to be determined by trader reaction to $72.49.

Bullish Scenario

A sustained move over $72.49 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $73.59.

Sellers could come in on the first test of $73.59, but overtaking it could trigger an acceleration to the upside with $77.85 the next major target.

Bearish Scenario

A sustained move under $72.49 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the 50% level at $71.39. Look for buyers on the first test.

A failure to hold $71.39 will indicate the selling is getting stronger. This could trigger a break into the pivot at $69.38.