Oil Price Fundamental Daily Forecast – Sustained Move Over $35.19 Could Trigger Surge into $38.33 – $38.82

U.S. West Texas Intermediate crude oil futures are trading higher on Tuesday, boosted by rising Treasury yields and a stronger equity market, or essentially increased demand for risky assets. The price action doesn’t suggest a change in trend is imminent, but mostly that yesterday’s steep plunge may have been a little excessive.

At 11:59 GMT, May WTI crude oil is trading $34.79, up $3.32 or +10.58%.

On Monday, WTI crude oil dropped 24.19% amid escalating tensions between Saudi Arabia and Russia, which traders fear could lead to an excess supply of crude oil. Based on this assessment, any gains are likely to be capped, with rallies likely being met by resumed selling pressure.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $27.83 will signal a resumption of the downtrend.

The main trend will change to up on a trade through $48.82. This is highly unlikely, however, there is room for a normal 50% to 61.8% retracement. Furthermore, traders could try to fill the gap left by Monday’s gap-lower opening.

The minor trend is also down. However, traders may treat yesterday’s high at $35.19 as a breakout level. This could trigger a surge into the $41.29 to $35.19 price gap.

Daily Technical Forecast

Based on yesterday’s price action and the current price at $34.79, the direction of the May WTI crude oil market the rest of the session on Tuesday is likely to be determined by trader reaction to yesterday’s high at $35.19, or the bottom of the gap.

Bullish Scenario

A sustained move over $35.19 will indicate the short-covering is getting stronger. If this move is able to generate enough upside momentum then look for the buying to possibly extend into the resistance cluster at $38.33 to $38.82.

Bearish Scenario

A sustained move under $35.19 will signal the presence of sellers. They don’t want to see the gap filled in. If the selling creates enough downside momentum then look for the move to possibly extend into the 50% of yesterday’s range at $31.51.

A trade through $31.51 will indicate that sellers have returned with the next target yesterday’s low at $27.83.