Crude Oil Price Update – Sustained Breakout Over $73.59 Could Lead to Near-Term Test of $77.85 Main Top

U.S. West Texas Intermediate crude oil tested its highest level since November 26 on Thursday as concerns that the omicron COVID-19 variant could hit oil demand eased. The market was further supported by worries over tight supply. While the good news bolstered prices, the thin trading volumes before the long Christmas holiday weekend raised some caution flags.

On Thursday, March WTI crude oil futures settled at $73.42, up $1.09 or +1.51%. March Brent crude oil finished at $76.64, up $1.36 or +1.77%. The United States Oil Fund ETF (USO) closed at $53.13, up $0.65 or +1.24%.

On the bullish side, the market is being supported by mostly positive news over COVID-19 vaccines/treatments. Perhaps helping to cap gains are cautious investors amid surging infection cases. Overall, there seems to be a developing upside bias with the market closing with strong momentum after erasing 61.8% of its October to December sell-off.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on December 23 when buyers took out the previous main top at $72.82. A move through $65.93 will change the main trend to down.

The main range is $80.72 to $62.05. The market settled inside its retracement zone at $71.39 to $73.59. This zone is controlling the near-term direction of the market.

The minor range is $65.93 to $73.60. Its 50% level or pivot at $69.77 is support.

The short-term range is $62.05 to $73.60. Its retracement zone at $67.83 to $66.47 is protecting the downside.

Short-Term Outlook

The near-term direction is likely to be determined by trader reaction to the Fibonacci level at $73.59 and the 50% level at $71.39.

The way of least resistance is up with a breakout over $73.59 potentially leading to a test of the next main top at $77.85.

The inability to overcome $73.59 will signal the presence of sellers with a labored break to follow. Potential downside targets include $71.39, $69.77 and $67.83.