U.S. West Texas Intermediate crude oil futures are edging higher on Tuesday on possible supply distribution problems after attacks in the Mideast Gulf added to an already tight supply outlook. The market is also being supported by an easing of concerns over Omicron after some reports hinted the outbreak in the United States may have peaked.
Supply concerns have risen this week after Yemen’s Houthi group attacked the United Arab Emirates, escalating hostilities between the Iran-aligned group and a Saudi Arabian-led coalition.
After launching drone and missile strikes which set off explosions in fuel trucks and killed three people, the Houthi movement warned it could target more facilities, while the UAE said it reserved the right to “respond to these terrorist attacks”.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through the intraday high at $85.16 will signal a resumption of the uptrend. A move 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 minor range is $77.34 to $85.16. Its 50% level or pivot at $81.25 is the nearest support.
The second minor range is $74.01 to $85.16. Its 50% level at $79.59 is additional support.
Daily Swing Chart Technical Forecast
The direction of the March WTI crude oil futures contract on Tuesday will be determined by trader reaction to $83.30.
A sustained move over $83.30 will indicate the presence of buyers. Taking out $85.16 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for a possible surge into $88.18.
A sustained move under $83.30 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the first pivot at $81.25.
A close under $83.30 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.