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U.S. West Texas Intermediate crude oil futures are trading flat early Wednesday after dropping more than 5% the previous session. The market is being underpinned by a report from late Tuesday that showed U.S. oil inventories unexpectedly fell last week.
At 01:15 GMT, June WTI crude oil futures are trading $102.07, up $0.02 or +0.02%. On Tuesday, the United States Oil Fund ETF (USO) settled at $76.87, down $3.54 or -4.40%.
June WTI crude oil was down sharply on Tuesday on concerns about energy demand after the International Monetary Fund (IMF) cut its economic growth forecasts. However, the demand concerns have been offset by a tighter supply outlook following sanctions on Russia.
An unexpected drop in U.S. crude inventory is also helping to underpin prices. Late Tuesday, the American Petroleum Institute (API) reported inventories fell by 4.5 million barrels for the week-ended April 14. Analysts were looking for an increase of about 2.5 million barrels.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $109.20 will signal a resumption of the uptrend. A move through $92.60 will change the main trend to down.
The short-term range is $121.17 to $90.37. Its retracement zone at $105.77 to $109.40 is resistance. This zone stopped the selling at $109.20 on Monday.
The minor range is $92.60 to $109.20. Its retracement zone at $100.90 to $98.94 is the next target zone.
The main range is $61.48 to $121.17. Its retracement zone at $91.33 to $84.28 is the major support zone holding up the market.
Daily Swing Chart Technical Forecast
The direction of June WTI crude oil early Wednesday is likely to be determined by trader reaction to $100.90.
Bullish Scenario
A sustained move over $100.90 will indicate the presence of buyers. If this is able to create enough upside momentum then look for a surge into the short-term 50% level at $105.77.
Bearish Scenario
A sustained move under $100.90 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor Fibonacci level at $98.94.
Look for a technical bounce on the first test of $98.94. A failure to hold this level could trigger an acceleration to the downside.
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This article was originally posted on FX Empire