Crude Oil Price Update – May Be Forming Support Base

U.S. West Texas Intermediate crude oil futures are inching higher early Wednesday, following its biggest-ever monthly and quarterly losses. Sellers were driven by demand destruction caused by the coronavirus and fears of global oversupply as both Russia and Saudi Arabia prepare to flood the markets with cheap crude oil.

Domestically, U.S. crude inventories rose by 10.5 million barrels the week-ending March 27, well above forecasts for a 4 million barrel build-up, data from the American Petroleum institute showed.

At 02:56 GMT, May WTI crude oil is trading $20.54, up $0.06 or +0.29%.

Despite the bearish news, the market remains slightly underpinned by the hopes that talks between Russia and the United States would eventually lead to a price war truce between Saudi Arabia and Russia.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through $19.27 will signal a resumption of the downtrend. The main trend will change to up on a move through the last swing top at $28.49.

The minor trend is also down. A trade through $25.24 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is $28.49 to $19.27. Its retracement zone at $23.88 to $24.97 is the nearest potential upside target.

Short-Term Outlook

Early Wednesday, the May WTI crude oil futures contact is straddling a downtrending Gann angle at $28.49. Overcoming this angle will indicate the short-covering is getting stronger. This could lead to a test of the next downtrending Gann angle at $21.70.

Taking out $21.70 will also indicate the buying is getting stronger. A breakout over Tuesday’s high at $21.89 could create the upside momentum needed to challenge the short-term 50% level at $23.88.

On the downside, a sustained move under $28.49 will signal the presence of sellers. This could lead to a retest of the minor bottom at $19.27. This is a potential trigger point for an acceleration to the downside.