Crude Oil Price Update – Upside Momentum Could Carry Market to $57.41 Over Short-Run

U.S. West Texas Intermediate crude oil futures are up over 2% shortly after the close on Tuesday after OPEC+ producers showed strong compliance with their production cut commitments and as traders anticipated the start of fresh cuts from Saudi Arabia totaling about 1 million barrels per day.

Traders seemed to be shrugging over COVID-related demand concerns as expectations of a speedy recovery in the United States seemed to be offsetting worries over a second recession in the Euro Zone.

At 13:42 GMT, March WTI crude oil futures are trading $54.88, up $1.33 or +2.48%.

“With OPEC and its allies (OPEC+) endeavoring to keep global oil production below demand, we expect petroleum inventories to keep failing,” UBS said in a note.

“With inventories starting to drop in 2H20, the structure of the futures curve has shifted to become downward sloped. This is attracting investors.”

A pair of investment banks are now predicting Brent crude oil prices to hit $63 to $65 by the end of the year.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed after a three week setback earlier today when buyers took out the previous main top at $53.94. A trade though $51.64 will change the main trend to down.

The minor range is $51.64 to $55.02. Its retracement zone at $53.33 to $52.93 is new support. This zone will move up as the market moves higher.

Daily Swing Chart Technical Forecast

The daily chart indicates there is plenty of room to the upside with no visible resistance until the January 8 main top at $57.41.

The first sign of weakness would be a pullback under the previous top at $53.94, but since the main trend is up, buyers would likely be waiting to re-enter on a pullback into $53.33 to $52.93.

Side Notes

If supply is tightening as forecast then the weekly inventories reports will continue to show this. Today’s American Petroleum Institute (API) report, due to be released at 21:30 GMT later today could be a market moving event.