U.S. West Texas Intermediate crude oil futures closed sharply higher on Wednesday after hitting a multi-year high earlier in the session. The catalysts behind the rally were tight supply and a weaker U.S. Dollar.
Regarding the supply, U.S. crude inventories fell 4.6 million barrels last week to 413.3 million barrels, their lowest since October 2018, the Energy Information Administration (EIA) said. Analysts had forecast in a Reuters poll a 1.9 million-barrel drop.
In other news, the U.S. Dollar fell to a fresh two-month low against a basket of currencies after data showed U.S. consumer prices rose solidly in December. A weaker greenback tends to drive up demand for dollar-denominated commodities like crude oil.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $82.41 early Thursday will signal a resumption of the uptrend. A trade through $74.01 will change the main trend to down.
The minor trend is also up. A trade through $77.34 will change the minor trend to down. This will shift momentum to the downside.
The market also posted a new contract high after breaking out over the former contract high at $80.72, making it new support.
The minor range is $77.34 to $82.41. Its 50% level at $79.88 is new support. The second minor range is $74.01 to $82.41. Its 50% level at $78.21 is additional support. The 50% levels will move up as the market moves through $82.41.
Daily Swing Chart Technical Forecast
The early direction of the March WTI crude oil futures contract on Thursday will be determined by trader reaction to $82.02.
A sustained move over $82.02 will indicate the presence of buyers. Taking out $82.41 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for a surge into the pair of main tops at $83.74 and $84.18.
A sustained move under $82.02 will signal the presence of sellers. This could lead to a retest of the former top at $80.72. If this level fails then look for the selling to possibly extend into the first pivot at $79.88.
Thursday’s session begins with the March WTI crude oil futures contract inside the window in time for a closing price reversal top. A trade through $82.41 then a close below $82.02 will form this chart pattern. This won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day correction.