Crude Oil Price Update – Weakens Under $79.04, Strengthens Over $80.53

U.S. West Texas Intermediate crude oil futures are edging lower on Tuesday after giving back its earlier gains. Worries over tight inventories helped drive prices higher, however, gains were limited by fresh concerns over an increase in COVID-19 cases in Europe and China.

At 14:45 GMT, January WTI crude oil futures are trading $79.43, down $0.32 or -0.40%.

In other news, the oil market rally may ease off as prices that hit a three-year high last month help push up global production, particularly in the United States, the International Energy Agency (IEA) said on Tuesday.

“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon … due to rising oil supplies,” the Paris-based agency said in its monthly oil report.

“Current prices provide a strong incentive to boost (U.S.) activity even as operators stick to capital discipline pledges,” it said.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $77.23 will change the main trend to down. A move through $83.30 will signal a resumption of the uptrend.

The minor trend is also up. A trade through $78.28 will change the minor to down. This will confirm the shift in momentum.

The short-term range is $83.83 to $77.23. Its 50% level at $80.53 is resistance.

On the downside, potential support levels are $79.04 and $78.09. The latter is a potential trigger point for an acceleration into $76.22 and $75.25.

Daily Swing Chart Technical Forecast

The current price action suggests the direction of the January WTI crude oil futures contract into the close on Tuesday is likely to be determined by trader reaction to $79.04.

Bearish Scenario

A sustained move under $79.40 will indicate the presence of sellers. This could trigger a further break into $78.28, followed closely by $78.09.

If $78.09 fails then look for the selling to possibly extend into the main bottom at $77.23.

Bullish Scenario

A sustained move over $79.04 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into $80.53. This is a potential trigger point for an acceleration to the upside.