Crude Oil Price Update – Upside Momentum Wavering; Strengthens Over $79.09, Weakens Under $78.57

U.S. West Texas Intermediate crude oil futures are trading a little better early Wednesday after hitting its highest level since 2014 the previous session. The catalysts underpinning the market are global concerns about energy supply on signs of tightness in crude, natural gas and coal markets.

At 05:26 GMT, December WTI crude oil is trading $78.79, up $0.22 or +0.28%.

Gains are being capped by a U.S. inventory report that showed some signs of slowing fuel demand. Late Tuesday, the American Petroleum Institute (API) reported U.S. oil inventories rose by 951,000 barrels in the week to October 1.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $79.09 will signal a resumption of the uptrend. A move through $72.82 will change the main trend to down.

The minor range is $72.82 to 79.09. Its 50% level or pivot is potential support at $75.96.

The short-term range is $69.05 to $79.09. Its retracement zone at $74.07 to $72.89 is an even stronger support area.

Daily Swing Chart Technical Forecast

The early direction of the December WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to $78.57.

Bullish Scenario

A sustained move over $78.57 will indicate the presence of buyers. Taking out $72.82 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for the buying to possibly extend into the psychological $80.00 level, followed by a pair of main tops at $81.37 and $81.71.

Bearish Scenario

A sustained move under $78.57 will signal the presence of sellers. Taking out $77.17 will indicate the selling is getting stronger. If this move generates enough downside momentum then look for the selling to possibly lead to a test of the first pivot at $75.96.

Since the main trend is up, buyers are likely to come in on the first test of $75.96.

Side Notes

Look for volatility at 14:30 GMT with the release of the U.S. Energy Information Administration’s (EIA) weekly inventories report. It is forecast to show an 800,000 barrel draw, but we could see a surprise given the results of the API report.