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James Hyerczyk
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WTI Crude Oil

U.S. West Texas Intermediate crude oil futures are up over 2% shortly after the close on Tuesday after OPEC+ producers showed strong compliance with their production cut commitments and as traders anticipated the start of fresh cuts from Saudi Arabia totaling about 1 million barrels per day.

Traders seemed to be shrugging over COVID-related demand concerns as expectations of a speedy recovery in the United States seemed to be offsetting worries over a second recession in the Euro Zone.

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At 13:42 GMT, March WTI crude oil futures are trading $54.88, up $1.33 or +2.48%.

“With OPEC and its allies (OPEC+) endeavoring to keep global oil production below demand, we expect petroleum inventories to keep failing,” UBS said in a note.

“With inventories starting to drop in 2H20, the structure of the futures curve has shifted to become downward sloped. This is attracting investors.”

A pair of investment banks are now predicting Brent crude oil prices to hit $63 to $65 by the end of the year.

Daily March WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed after a three week setback earlier today when buyers took out the previous main top at $53.94. A trade though $51.64 will change the main trend to down.

The minor range is $51.64 to $55.02. Its retracement zone at $53.33 to $52.93 is new support. This zone will move up as the market moves higher.

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Daily Swing Chart Technical Forecast

The daily chart indicates there is plenty of room to the upside with no visible resistance until the January 8 main top at $57.41.

The first sign of weakness would be a pullback under the previous top at $53.94, but since the main trend is up, buyers would likely be waiting to re-enter on a pullback into $53.33 to $52.93.

Side Notes

If supply is tightening as forecast then the weekly inventories reports will continue to show this. Today’s American Petroleum Institute (API) report, due to be released at 21:30 GMT later today could be a market moving event.

For a look at all of today’s economic events, check out our economic calendar.
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