May WTI Buyers Eyeing Retracement to $112.99 – 116.16

U.S. West Texas Intermediate crude oil futures are trading higher at the mid-session on Friday as traders try to avoid posting a potentially bearish closing price reversal top on the weekly chart.

Today’s choppy, two-sided trade is being fueled by headlines around Russia and Iran suggesting more possible supply disruption, versus those that point toward potential remedies to alleviate market tightness.

At 17:41 GMT, May WTI crude oil futures are trading $106.29, up $3.30 or +3.20%. The United States Oil Fund ETF (USO) is at $76.10, up $2.04 or +2.75%.

Helping to underpin crude oil prices is the news that the United States had banned Russian oil purchases earlier in the week. Additional help is being provided by reports that talks to revive the 2015 Iran nuclear deal faced the threat of collapse after a last-minute Russian demand forced world powers to pause negotiations for an undetermined time despite having a largely completed text.

Traders are also dealing with some small headwinds including potential supply additions from Iran, Venezuela and the United Arab Emirates, but there is nothing in the cards to derail the bull market in my opinion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $126.42 will signal a resumption of the uptrend. A move through $85.81 will change the main trend to down.

The minor trend is also up. A trade through $88.49 will change the minor trend to down and shift momentum to the downside.

The short-term range is $85.81 to $126.42. The market is currently trading inside its retracement zone at $106.12 to $101.32.

The minor range is $126.42 to $99.55. Its retracement zone at $112.99 to $116.16 is the nearest upside target area.

Short-Term Outlook

The short-term direction of the May WTI crude oil market is likely to be determined by trader reaction to $106.12 to $101.32.

Look for an upside bias on a sustained move over $106.12 with $112.99 to $116.16 the first objective.

A downside bias could develop on a sustained move under $101.32. There is also the potential for an acceleration to the downside if $99.55 fails as support.