WTI Crude Oil Strength Puts $88.18 and $92.38 on Radar

U.S. West Texas Intermediate crude oil futures are trading at a multi-year high on Wednesday shortly before the release of the government’s weekly inventories report.

The U.S. benchmark is being supported by tight supply and geopolitical tensions in Europe and the Middle East that are raising concerns about further disruption.

At 13:48 GMT, March WTI crude oil futures are trading $86.97, up $1.37 or +1.60%. On Tuesday, the United States Oil Fund ETF (USO) settled $60.97, up $0.86 or +1.43%.

The official U.S. Energy Information Administration (EIA) supply report is due to be released at 15:30 GMT. It is expected to show crude oil inventories rose 1.0 million barrels during the week-ending January 21. Late Tuesday, the American Petroleum Institute (API) report showed crude stocks fell by 872,000 barrels.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out the previous main top at $87.10. A move through $81.90 will change the main trend to down.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil futures market on Wednesday is likely to be determined by trader reaction to $85.60.

Bullish Scenario

A sustained move over $85.60 will indicate the presence of buyers. Taking out the intraday high at $87.20 will indicate the buying is getting stronger. This could create the upside momentum to challenge the next main top at $88.18.

The main top at $88.18 is a potential trigger point for an acceleration into the long-term Fibonacci target at $92.38.

Bearish Scenario

A sustained move under $85.60 will signal the presence of sellers. If this move creates enough downside momentum over the near-term then look for a potential break into $81.90. A trade through this level will change the main trend to down.