Crude Oil Price Update – Fed Worries Dampening Price Action Ahead of EIA Inventories Report

U.S. West Texas Intermediate crude oil futures are trading flat and in a limited range early Wednesday ahead of today’s Energy Information Administration (EIA) inventories report. Overnight, a surprise build in the American Petroleum Institute’s (API) stockpiles report, put a lid on prices. The figures reinforced fears about weakening demand even as supply tightens.

At 08:49 GMT, March WTI crude oil futures are at $75.58, unchanged. On Tuesday, the United States Oil Fund ETF (USO) settled at $65.88, up $1.47 or +2.28%.

The early price action suggests traders are booking profits after yesterday’s U.S. consumer inflation report (CPI) showed prices cooling more than expected. The major players are also lightening up positions ahead of a number of Fed announcements later today at 19:00 GMT, including an interest rate decision, economic projections and a press conference.

At 15:30 GMT, the EIA will release its weekly inventories data. The report is expected to show a 3.4 million barrel draw in crude oil inventories.

Daily Swing Chart Technical Analysis

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

On the downside, the nearest support is a minor pivot at $73.45, followed by a major support area at $70.21 to $62.12.

On the upside, the closest resistance is a short-term retracement zone at $76.85 to $78.33, followed by the main retracement zone at $80.23 to $82.51.

Daily Swing Chart Technical Forecast

Trader reaction to $74.92 is likely to determine the direction of the March WTI crude oil market on Wednesday.

Bullish Scenario

A sustained move over $74.92 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $76.85 – $78.33.

Overcoming $78.33 will indicate the buying is getting stronger with $80.23 – $82.51 the next target area. This zone is the last potential resistance before the $83.14 main top.

Bearish Scenario

A sustained move under $74.92 will signal the presence of sellers. The first target is the minor pivot at $73.45. Taking out this level could trigger an acceleration into the main bottom at $70.56, followed by the long-term 50% level at $70.21.