Rangebound WTI Oil Strong Over $113.35, Weak Under $109.31

U.S. West Texas Intermediate crude oil futures posted a choppy two-sided trade before closing higher on Friday.

Pressuring the market early in the session were concerns over a U.S.-Iran nuclear deal, which would’ve brought new supply into the global market. Sellers were also encouraged by the news of a possible release of oil reserves by the United States.

On Friday, May WTI crude oil futures settled at $113.90, up $1.56 or +1.39%. The United States Oil Fund ETF (USO) finished at $80.76, up $1.01 or +1.27%. The U.S. benchmark also posted its first weekly gain in three weeks, gaining 8.8%.

Following the early loss, the market rebounded more than 1% as traders assessed the impact of a missile attack on an oil distribution facility in Saudi Arabia. The attack comes just five days after the Houthi group fired missiles and drones at Saudi energy and water desalination facilities, causing a temporary drop in output at a refinery.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum turned lower following the confirmation of Thursday’s closing price reversal top.

A trade through $116.64 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $92.20 will change the main trend to down.

The short-term range is $126.42 to $92.20. The market settled just above its retracement zone at $113.35 to $109.31, making it potential support.

The intermediate range is $85.81 to $126.42. Its retracement zone at $106.12 to $101.32 is additional support. Inside this zone is a minor 50% support level at $104.42.

The major support is the retracement zone at $94.14 to $86.52.

Short-Term Outlook

The short-term direction of the May WTI crude oil futures contract is likely to be determined by trader reaction to $113.35 and $109.31.

Bullish Scenario

Look for the upside bias to continue on a sustained move over $113.35. Overtaking this level could trigger a surge into $116.64.

Overtaking $116.64 will not only reaffirm the uptrend, but it could trigger an acceleration to the upside with $126.42 the primary upside target.

Bearish Scenario

A sustained move under $109.31 will be a sign of weakness. This could lead to a labored break with potential support levels coming in at $106.12, $104.42 and $101.32.

The Fibonacci level at $101.32 is a potential trigger point for an acceleration to the downside with $94.14 the first target, followed by the main bottom at $92.20.