U.S. West Texas Intermediate crude oil futures are trading higher early Tuesday, following a strong performance the previous session. The market is being underpinned by tight supply and hopes of a further demand recovery in 2022, despite OPEC+ looking set to agree to another output increase and persistent concerns about how rising COVID infections might affect demand.
Investors expect major producers will likely stick to their planned increase of 400,000 barrels per day in oil output for February when it meets on Tuesday, four sources from the group told Reuters, as it expects the Omicron coronavirus variant to have a short-lived impact on demand.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $77.06 will reaffirm the uptrend. A move through $65.93 changes the main trend to down.
The minor trend is down. This is controlling the momentum. A trade through the minor bottom at $74.01 will indicate the selling pressure is getting stronger. Taking out $77.06 changes the minor trend to up.
The minor range is $77.06 to $74.01. The market is currently trading on the strong side of its pivot at $75.54, making it support.
Crude oil is also trading on the strong side of its main retracement zone at $73.59 to $71.39. This area is controlling the near-term direction of the market, making it the strongest support.
Daily Swing Chart Technical Forecast
The direction of the March WTI crude oil market on Tuesday is likely to be determined by trader reaction to $75.54.
A sustained move over $75.54 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into $77.06.
Taking out $77.06 reaffirms the uptrend with the November 24 main top at $77.85 the next target. This is a potential trigger point for an acceleration to the upside. This could extend the rally into the October 26 contract high at $80.72.
A sustained move under $75.54 will signal the presence of sellers. This could trigger a break into $74.01, followed closely by $73.59.
The Fibonacci level at $73.59 is a potential trigger point for an acceleration into the main 50% level at $71.39.