U.S. West Texas Intermediate crude oil futures are trading flat early Wednesday after posting a strong performance the previous session despite the rapid spread of the Omicron coronavirus variant. The market is being underpinned by worries over supply outages and a private industry report that showed a weekly inventory draw.
Supply problems in Ecuador, Libya and Nigeria helped boost prices higher on Tuesday. The three producers declared forces majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.
In other news, the American Petroleum Institute (API) estimated the inventory draw for crude oil to be 3.09 million barrels. The API also reported a draw in gasoline inventories of 319,000 barrels for the week-ending December 24 after the previous week’s 3.701-million barrel build.
Distillate stocks saw a decrease in inventory of 716,000 barrels for the week, after last week’s 849,000-barrel decrease.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $76.50 will signal a resumption of the uptrend. A move through the main top at $77.85 will reaffirm the uptrend. The main trend will change to down on a move through $65.93.
The main range is $80.72 to $62.05. The market is trading on the strong side of its retracement zone at $73.59 to $71.39, making it support.
The short-term range is $62.05 to $76.50. Its retracement zone at $69.28 to $67.57 is a value zone.
Daily Swing Chart Technical Forecast
The direction of the March WTI crude oil futures contract on Wednesday is likely to be determined by trader reaction to $75.81.
A sustained move over $75.81 will indicate the presence of buyers. This could trigger a retest of $76.50. Taking out this level could fuel a surge into $77.85. Overtaking this level could trigger an acceleration to the upside.
A sustained move under $75.81 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the main Fibonacci level at $73.59. Since the main trend is up, look for buyers on a test of this level.