U.S. West Texas Intermediate crude oil futures surged as high as 12% earlier in the session on reports that Saudi Arabia and Russia had reached a deal on a deep output cut, according to Reuters, which cited two sources, and that the cuts could reportedly be as high as 20 million barrels per day.
However, those gains could not be sustained as traders awaited confirmation of the deal as well as key details, such as how the cuts would be divided, as well as how long they might be in place.
At 16:20 GMT, May WTI crude oil is trading $26.10, up $1.01 or +4.03%. This is down from an intraday high of $28.36.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, prices have stagnated for four sessions as traders awaited the outcome of the OPEC+ video conference scheduled last Sunday.
A trade through $29.13 will signal a resumption of the uptrend. The main trend will change to down on a trade through the last main bottom at $19.27.
The main range is $36.70 to $19.27. Its retracement zone at $27.99 to $30.04 is resistance. This zone stopped the buying at $29.13 on April 3 and again earlier today at $28.36. Clearly, this zone is controlling the near-term direction of the market.
The short-term range is $19.27 to $29.13. Its retracement zone is $24.20 to $23.04. It provided support on Tuesday and Wednesday.
Daily Technical Forecast
Based on the early price action and the current price at $26.10, the direction of the May WTI crude oil market the rest of the session on Thursday is likely to be determined by trader reaction to the downtrending Gann angle at $26.20.
A sustained move over $26.20 will indicate the presence of buyers. Overcoming the uptrending Gann angle at $27.27 will indicate the buying is getting stronger.
Crossing to the strong side of the 50% level at $27.99 will indicate the buying is getting stronger. This could trigger an acceleration into $29.13, followed by the main Fibonacci level at $30.04.
In order to show real strength, the buying is going to have to be strong enough to close above $30.04 today.
A sustained move under $26.20 will signal the presence of sellers. This could trigger a late session break into $24.20. Since the main trend is up, buyers could try to reestablish support at this level later in the session.
Basically, the major resistance is $27.99 to $30.04 and the major support is $24.20 to $23.04.
Even if there is a deal, gains are likely to be limited because of the demand destruction caused by the impact of the coronavirus.