June WTI Crude Oil Testing Short-Term Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading at their highest level in more than a week on Friday as fears over Russian supply distribution trumped COVID-19 lockdowns in China, the world’s biggest crude importer.

At 11:42 GMT, June WTI crude oil futures are trading $106.28, up $0.92 or +0.87%. On Thursday, the United States Oil Fund ETF (USO) settled at $78.12, up $1.75 or +2.29%.

In addition to today’s early gains, the market is set to finish up on the week and post its fifth straight monthly gain. Bolstering prices most of the week has been the likelihood that Germany will join other European Union member states in an embargo on Russian oil.

The embargo news is expected to contribute to heightened volatility also with demand concerns as China shows no signs of easing lockdown measures despite the impact on its economy and global supply chains.

Also on the supply side, OPEC+ is likely to stick to its existing deal and agree another small output increase for June when it meets on May 5, six sources from the producer group told Reuters on Thursday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $109.20 will reaffirm the uptrend. A move through $95.28 will change the main trend to down.

The minor trend is also up. This is controlling the upside momentum.

The short-term range is $121.17 to $90.37. The market is currently testing its retracement zone at $105.77 to $109.40.

On the downside, potential support is a pivot at $102.24 and a minor retracement zone at $100.90 to $98.94.

Daily Swing Chart Technical Forecast

The direction of the June WTI crude oil market on Friday is likely to be determined by trader reaction to $105.77.

Bullish Scenario

A sustained move over $105.77 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the resistance cluster at $109.20 – $109.40. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $105.77 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into a series of potential resistance levels at $102.24, $100.90 and $98.94.