March WTI Oil Set Up for Volatile Reaction to Iran Decision

U.S. West Texas Intermediate crude oil futures are inching lower early Thursday as traders shrugged off yesterday’s surprisingly bullish U.S. crude inventories report, choosing instead to focus on the outcome of the U.S.-Iran nuclear talks that could add crude supplies quickly to global markets.

At 07:17 GMT, March WTI crude oil futures are trading $89.44, down $0.22 or -0.25%. On Wednesday, the United States Oil Fund ETF (USO) settled at $64.17, up $0.55 or +0.86%.

On Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude inventories fell 4.8 million barrels in the week ending February 4, dropping to 410.4 million barrels – their lowest for commercial inventories since October 2018. Analysts in a Reuters poll had forecast a 369,000-barrel rise.

Additionally, U.S. product supplied – the best proxy for demand – peaked at 21.9 million barrels per day (bpd) over the past four weeks due to strong economic activity nationwide, EIA data showed.

Meanwhile, the U.S. is pressuring Iran to revive the 2015 Iran nuclear agreement quickly. Prices could fall further if a deal is struck to lift U.S. sanctions on Iranian oil and ease global supply tightness. However, if the negotiations fail then look for a surge into last week’s high.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $93.17 will signal a resumption of the uptrend. A move through $81.90 will change the main trend to down.

The minor trend is also up. A trade through $86.75 will change the minor trend to down. This will shift momentum to the downside.

The minor range is $86.34 to $93.17. The market is currently straddling its pivot at $89.76.

The second minor range is $93.17 to $88.41. Its pivot at $90.79 is the nearest upside target.

The major resistance is a long-term Fibonacci level at $92.38.

The short-term range is $81.90 to $93.17. Its 50% level at $87.54 is a potential support level.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil market on Thursday is likely to be determined by trader reaction to $89.76.

Bullish Scenario

A sustained move over $89.76 will indicate the presence of buyers. This could trigger the start of a labored rally with potential upside targets a minor pivot at $90.79, a long-term Fibonacci level at $92.38 and a main top at $93.17.

Taking out $93.17 will reaffirm the uptrend. This could also launch the start of a rally with the psychological $100 level the next major target.

Bearish Scenario

A sustained move under $89.76 will signal the presence of sellers. This could also lead to a labored break with the first target yesterday’s low at $88.41. This is followed by a short-term 50% level at $87.54, and a pair of minor bottoms at $86.75 and $86.34.

The minor bottom at $86.34 is a potential trigger point for an acceleration into another short-term 50% level at $83.59. This is the last potential support before the $81.90 main bottom.