WTI Crude Oil Trade Through $86.34 Shifts Momentum to Down

U.S. West Texas Intermediate crude oil futures are edging lower on Thursday as traders used yesterday’s OPEC+ policy announcement as an excuse to book profits. Uncertainty over the aggressiveness of the Federal Reserve is also coming into play after ADP reported weak private payrolls data on Wednesday.

Nonetheless, the market is being well supported by supply shortages, rising demand and worries over potential supply disruptions due to geopolitical tensions in Eastern Europe and the Middle East.

At 10:50 GMT, March WTI crude oil futures are trading $87.01, down $1.25 or -1.42%. On Wednesday, the United States Oil Fund ETF (USO) settled at $62.53, unchanged.

OPEC and its allies agreed on Wednesday to stick to moderate rises of 400,000 bpd oil output despite pressure from top consumers to raise output more quickly. Also on Wednesday, the U.S. Energy Information Administration (EIA) reported a surprise drawdown in crude stockpiles of 1 million barrels during the week-ending January 28.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $89.72 will signal a resumption of the uptrend. A move through $81.90 will change the main trend to down.

The minor trend is also up. A trade through $86.34 will change the minor trend to down. This will shift momentum to the downside.

The minor range is $86.34 to $89.72. The market is currently trading on the weak side of its pivot at $88.03.

The nearest 50% support is $85.81, followed by a pair of pivots at $83.53 and $81.87.

Daily Swing Chart Technical Forecast

The direction of the March WTI crude oil market on Thursday is likely to be determined by trader reaction to $88.03.

Bearish Scenario

A sustained move under $88.30 will signal the presence of sellers. Taking out $86.34 will change the minor trend to down, leading to a quick test of $85.81. If this level fails then look for an acceleration into $83.53, followed by a support cluster at $81.90 – $81.87.

Bullish Scenario

A sustained move over $88.30 will indicate the presence of buyers. This could create the momentum needed to challenge $89.72. Taking out this level could trigger an acceleration into the long-term Fibonacci resistance at $92.38.