Crude Oil Price Update – Upside Momentum Could Strengthen Over $28.34

U.S. West Texas Intermediate crude oil futures are trading higher on Friday, following through to the upside after yesterday’s strong gains, as data showed demand for crude picking up in China after the easing of curbs to stem the coronavirus outbreak, boosting hopes that the global supply overhang may start to fade.

At 11:53 GMT, July WTI crude oil futures are trading $28.35, up $0.47 or +1.69%. WTI is also in a position to post its third straight weekly gain, up more than 12%.

Amid supply cuts by OPEC and its allies, bright spots are also emerging on the demand side. Data released on Friday showed China’s daily crude oil use rebounded in April as refineries ramped up operations.

Prices received a boost on Thursday after the international Energy Agency said it expects crude inventories to fall by about 5.5 million barrels per day in the second half of this year. This is down from an earlier estimate of 9.1 million barrels.

On Wednesday, prices were underpinned by the Energy Information Administration (EIA) report that showed U.S. crude inventories fell for the first time in 15 weeks.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a trade through the last main top at $35.18. A move through $17.27 will signal a resumption of the downtrend.

The minor trend is up. The minor trend changed to up on Thursday when buyers took out the minor swing top at $27.98. This also shifted momentum to the upside. A trade through $24.38 will change the minor trend to down.

The short-term range is $35.18 to $17.27. Its retracement zone at $26.23 to $28.34 is potential support. This zone is controlling the near-term direction of the market.

The main range is $54.86 to $17.27. Its retracement zone at $36.07 to $40.50 is the next major upside target. This will get hit after the main trend changes to up.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at $28.35, the direction of the July WTI crude oil market the rest of the session on Friday is likely to be determined by trader reaction to the short-term Fibonacci level at $28.34.

Bullish Scenario

A sustained move over $28.34 will indicate the presence of buyers. This could trigger an acceleration to the upside since there is no major resistance until $35.18 to $36.07.

Bearish Scenario

A sustained move under $28.34 will signal the presence of sellers. This could trigger a retest of the short-term 50% level at $26.23.

If $26.23 fails as support then start preparing for a 50% to 61.8% retracement of the rally from $17.27.