May WTI Oil Trying to Form Support Base at $94.14 – $86.52

U.S. West Texas Intermediate crude oil futures are trading flat on Wednesday after giving back earlier gains. After a sharp break at the start of the week, the market may be attempting to establish a support base, but today’s early trade suggests investor indecision and impending volatility.

At 11:13 GMT, May WTI crude oil futures are trading $94.86, up $0.07 or +0.07%. On Tuesday, the United States Oil Fund ETF (USO) settled at $68.57, down $4.27 or -5.86%.

Mixed fundamentals may also be behind today’s early two-sided trade. Helping to underpin prices are easing concerns over slowing demand in China, while signs of progress in Russia-Ukraine peace talks capped gains.

Traders will be watching today’s U.S. Energy Information Administration (EIA) weekly inventories report amid supply concerns. It is expected to show a 1.8 million barrel drawdown.

Late Tuesday, the American Petroleum Institute (API) reported an unexpected jump in crude stockpiles during the week-ended March 11. Crude inventories rose 3.8 million barrels versus an estimate calling for a draw of 1.9 million barrels.

Daily Swing Chart Technical Analysis

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

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

The main range is $61.86 to $126.42. The market is currently testing its retracement zone at $94.14 to $86.52. This zone stopped the selling at $92.20 on Tuesday.

On the upside, potential resistance is layers of retracement levels at $101.32 to $106.12 and $109.31 to $113.35.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to $94.14.

Bullish Scenario

A sustained move over $94.14 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the retracement zone at $101.32 – $106.12.

Bearish Scenario

A sustained move under $94.14 will signal the presence of sellers. The first downside target is $92.20. If this level fails then look for the selling to possibly extend into the minor bottom at $88.49, followed by a Fibonacci level at $86.52 and a main bottom at $85.81