U.S. West Texas Intermediate crude oil futures are trading higher on Thursday, boosted by signs that the U.S. crude oil supply glut is not growing as quickly as expected and a surprise lift in fuel demand.
The news that is fueling the short-covering rally actually came out on Wednesday. The U.S. Energy Information Administration (EIA) reported crude inventories grew by 9 million barrels the week-ending April 24 to 527.6 million barrels. This is just under the 535.0 million barrel record. Analysts were looking for a 10.6 million-barrel rise.
Meanwhile, a slight rise in fuel demand offset a rebound in refinery output. According to the EIA, U.S. gasoline stockpiles fell by 3.7 million barrels from record highs the previous week.
At 17:53 GMT, June WTI crude oil is trading $16.82, up $1.76 or +11.69%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $6.50 will signal a resumption of the downtrend. The main trend will change to up on a move through $33.15 which is highly unlikely at this time.
Taking out the April 23 high at $18.26 didn’t mean anything to the minor or main trend.
The minor range is $6.50 to $18.62. Its retracement zone at $12.56 should be considered minor support.
The short-term range is $33.15 to $6.50. Its retracement zone at $19.83 to $22.97 is the first upside target and potential resistance. Since the main trend is down, sellers could come in on a test of this area.
The headlines are creating the momentum in this market. The supply/demand situation is controlling the trend.
If the upside momentum continues then look for the short-covering rally to possibly extend into the retracement zone at $19.83 to $22.97. Watch for sellers on the first test of this zone.
If the momentum shifts back to the downside then look for a possible test of the pivot at $12.56.