Oil Price Fundamental Daily Forecast – Rebounding Ahead of EIA Report

U.S. West Texas Intermediate crude oil futures are extending their losses for a second session on Wednesday as speculative investors continued to trim long positions on fears that more aggressive Federal Reserve interest rate hikes would reduce demand and possibly lead to a future recession. At the same time, investors await more clarity on government inventories from the U.S. Energy Information Administration (EIA).

At 09:33 GMT, April WTI crude oil futures are trading at $77.33, down $0.25 or -0.32%. On Tuesday, the United States Oil Fund ETF (USO) settled at $67.83, down $2.66 or -3.77%.

Powell, API Inventories Report Driving Early Price Action

Federal Reserve Chairman Jerome Powell crushed WTI and Brent crude oil on Tuesday after he said the central bank would likely need to raise interest rates more than expected in response to recent robust data.

According to market sources, supply-related news data from the American Petroleum Institute showed U.S. crude inventories fell by about 3.8 million barrels in the week ended March 3. The drawdown defied forecasts for a 400,000 barrel rise in crude stocks from nine analysts polled by Reuters.

Meanwhile, according to the sources, gasoline inventories rose by about 1.8 million barrels, while distillate stocks rose by 1.9 million barrels.

Looking Ahead…

Crude oil traders are awaiting inventories data from the EIA, due to be released at 15:30 GMT, after the API data showed a more significant than expected decline in crude inventories for the first time in 10 weeks. Traders are looking for a crude oil build of 1.3 million barrels.

Daily April WTI Crude Oil Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower following yesterday’s closing price reversal top.

A trade through $80.94 will signal a resumption of the uptrend. A move through $73.80 will change the main trend to down.

Resistance is a retracement zone at $79.76 to $81.85. This zone stopped the buying at $80.94 on Tuesday. Support is a retracement area at $76.88 to $75.46. It was successfully tested earlier today at $76.82.

Daily April WTI Crude Oil Technical Forecast

Trade reaction to the 50% level at $76.88 will likely determine the direction of the April WTI crude oil futures contract on Wednesday.

Bullish Scenario

A sustained move over $76.88 will indicate the presence of buyers. If this creates enough upside momentum, look for a sure into a minor pivot at $78.88, followed by a 50% level at $79.76.

Bearish Scenario

A sustained move under $76.88 will signal the presence of sellers. This could drive the market into the Fibonacci level at $75.46. This is the last potential support before the $73.80 main bottom and change in trend.