U.S. West Texas Intermediate crude oil futures are edging higher on Tuesday as traders await the decision by Russia as to whether it will accept the terms of the new proposal to increase OPEC+ production cuts, or pass on making the move. Increased demand for risky assets is also helping to underpin the market. Some factories have restarted in China, which could mean the worst of the crude oil demand crisis is over.
At 15:55 GM%, March WTI crude oil is trading $50.50, up $0.93 or +1.88%.
Russia’s decision to take the deal or pass will be a market moving event. If Russia decides to go along with the move by OPEC+ then look for a strong short-covering rally. If Russia passes then prices could plunge toward multi-year lows.
Later today at 21:30 GMT, investors will get the opportunity to react to the latest weekly inventories report from the American Petroleum Institute (API). Traders are looking for a 2.9 million barrel build.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through $49.31 will signal a resumption of the downtrend. The main trend will change to up on a move through $52.20.
The minor trend is also down. A new higher minor bottom was formed at $49.42 earlier today.
The minor range is $52.20 to $49.42. Its 50% level or pivot comes in at $50.81.
The short-term range is $54.37 to $49.31. Its 50% level or pivot at $51.84 is the first upside target.
Daily Technical Forecast
Based on the early price action and the current price at $50.50, the direction of the March WTI crude oil market the rest of the session on Tuesday is likely to be determined by trader reaction to the minor pivot at $50.81.
A sustained move under $50.81 will signal the presence of sellers. If this creates enough downside momentum then look for a potential retest of a pair of bottoms at $49.42 and $49.31.
Look for an acceleration to the downside if $49.31 fails as support.
A sustained move over $50.81 will indicate the presence of buyers. This could trigger a surge to the upside with the first target a 50% level at $51.84, followed closely by a downtrending Gann angle at $52.27.