Crude Oil Price Update – Early Strength Fueled by Tight US Supply as Arctic Blast Hits

U.S. West Texas Intermediate crude oil futures are surging on Thursday, testing its highest level since Dec. 5 as prices rose for a fourth straight session. The rally is being fueled by tight supplies in the United States including crude, heating oil and jet fuel stocks. One catalyst behind the move is the arctic blast currently sweeping across the country.

At 14:20 GMT, March WTI crude oil futures are trading $79.12, up $0.88 or +1.12%. On Wednesday the United States Oil Fund ETF (USO) is at $68.07, up $1.85 or +2.79%.

The U.S. benchmark is extending yesterday’s jump in prices that was ignited by a government report that showed U.S. crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week ending on December 16.

Distillate stocks, which include heating oil and jet fuel also surprised traders with an unexpected drawdown.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $83.14 will change the main trend to up. A move through $70.56 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through $73.49 will change the minor trend to down.

The short-term range is $83.14 to $70.56. The market is currently trading on the strong side of its retracement zone at $78.33 to $76.85, making it support.

The main range is $89.89 to $70.56. Its retracement zone at $80.23 to $82.51 is the next upside target.

Additional support is a minor pivot at $74.19.

Daily Swing Chart Technical Forecast

Trader reaction to the Fibonacci level at $78.33 is likely to determine the direction of the March WTI crude oil market on Thursday.

Bullish Scenario

A sustained move over $78.33 will indicate the presence of buyers. The first upside target is the main 50% level at $80.23. Look for sellers on the first test of this level. Taking it out could extend the rally into $82.51, which is the last potential resistance before the $83.14 main top.

Bearish Scenario

A sustained move under $78.33 will signal the presence of sellers. This could trigger a break into $76.85. If this level fails then look for an acceleration to the downside with $74.19 the next likely target.