WTI Oil Reaction to $106.12 – $101.32 Sets Near-Term Course

U.S. West Texas Intermediate crude oil futures are edging higher on Wednesday, rebounding from this week’s steep losses on renewed worries over supply tightness and the growing prospect of new Western sanctions against Russia. Gains could be limited, however, as signs of progress emerged from peace talks between Moscow and Kyiv.

At 09:58 GMT, May WTI crude oil futures are trading $106.20, up $1.96 or +1.88%. On Tuesday, the United States Oil Fund ETF (USO) settled at $76.13, up $1.60 or +2.15%.

Although there is some optimism that peace could break out in Ukraine, if relations with Europe worsen and an oil embargo is put in place, the market would see an additional 1 million barrels per day of Russian production at risk. Furthermore, according to consultancy JBC Energy, “The United States and its allies are planning new sanctions on more sectors of Russia’s economy that are critical to sustaining its invasion of Ukraine, including military supply chains.”

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the confirmation of the closing price reversal top on March 24.

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 main range is $61.86 to $126.42. Its retracement zone at $94.14 to $86.52 is major support. This area stopped the selling at $92.20 on March 15.

The intermediate range is $85.81 to $126.42. The market is currently trading inside its retracement zone at $106.12 to $101.32.

The short-term range is $126.42 to $92.20. Its retracement zone at $109.31 to $113.35 is the next upside target. This zone will determine whether the rally continues or fails.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil market on Wednesday is likely to be determined by trader reaction to $106.12.

Bullish Scenario

A sustained move over $106.12 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into $109.31 to $113.35. This is the last resistance before the $116.64 main top. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under $106.12 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to extend into $101.32. This is the last potentially support before yesterday’s low at $98.44. Taking out this level could drive the market into $94.14, followed by $92.20. A move through this level will change the main trend to down.