May WTI Crude Oil Selling Could Accelerate Under $99.55

U.S. West Texas Intermediate crude oil futures are edging lower on Monday as investors wagered on hopes that diplomatic efforts by Ukraine and Russia will lead to a quick end to the military conflict between Russia and Ukraine. Meanwhile, a surge in Omicron cases in China spooked traders enough to pare long positions on fears of lower demand.

At 13:20 GMT, May WTI crude oil futures are trading $101.82, down $4.48 or -4.21%. On Friday, the United States Oil Fund ETF (USO) settled at $76.35, up $2.29 or +3.09%.

According to Reuters, Ukrainian and Russian negotiators are set to talk again on Monday via video link. Negotiators had given their most upbeat assessments after weekend negotiations, suggesting there could be positive results within days.

Reuters also reported that China, the world’s largest crude oil importer and second largest consumer after the United States, is seeing a surge in COVID-19 cases, as the highly transmissible Omicron variant spreads to more cities, triggering outbreaks from Shanghai to Shenzhen.

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.

The market has been consolidating for three sessions slightly above the March 9 low at $99.55. This price could be the trigger point for an acceleration to the upside.

The short-term range is $85.81 to $126.42. The market is currently testing the lower end of 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.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the May WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at $101.32.

Bearish Scenario

A sustained move under $101.32 will indicate the presence of sellers. The first target is last week’s low at $99.55. This price is a potential trigger point for an acceleration to the downside with the next targets a minor bottom at $88.49 and the main bottom at $85.81.

Bullish Scenario

A sustained move over $101.32 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the 50% level at $106.12.

Overtaking $106.12 will indicate the buying is getting stronger. This is a potential trigger point for an acceleration into $112.99 to $116.16.