May WTI Oil in Position to Test Major Retracement Zone

U.S. West Texas Intermediate crude oil futures are trading at a three-week low shortly before the mid-session on Thursday. The selling pressure is being fueled by the announcement of a huge release of oil from emergency reserves by some of the largest oil consuming nations.

At 15:26 GMT, May WTI crude oil is trading $95.06, down $1.17 or -1.22%. The United States Oil Fund ETF (USO) is at $71.69, down $1.36 or -1.86%.

International Energy Agency (IEA) member countries on Wednesday agreed to release 60 million barrels on top of a 180 million-barrel release announced by the United States last week to help drive down prices amid supply fears following Russia’s invasion of Ukraine.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $105.59 will change the main trend to up. The next downside target is the main bottom at $92.20.

The market is also trading on the weak side of the intermediate retracement zone at $101.32 to $106.12, making it resistance.

The main range is $61.86 to $126.42. Its retracement zone at $94.14 to $86.52 is the next target area. This zone stopped the selling at $92.20 on March 15.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil market into the close on Thursday is likely to be determined by trader reaction to the main 50% level at $94.14.

Bearish Scenario

A sustained move under $94.14 will indicate the presence of sellers. The first downside target is the main bottom at $92.20. Taking out this level will reaffirm the downtrend with the next key target the main Fibonacci level at $86.52.

Bullish Scenario

A sustained move over $94.14 will signal the presence of buyers. This could trigger an intraday short-covering rally with the intermediate Fibonacci level at $101.32 the next potential target.