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U.S. West Texas Intermediate crude oil futures are trading higher early Tuesday on reports that some European Union (EU) nations are considering imposing sanctions on Russian oil and oil products. The market is also being underpinned by supply concerns after an attack on Saudi oil facilities over the weekend.
At 01:02 GMT, May WTI crude oil is trading $112.06, up $2.09 or +1.90%. On Monday, the United States Oil Fund ETF (USO) settled at $79.53, up $4.89 or +6.55%.
According to reports, European foreign ministers are split on whether to join the United States in sanctioning Russian crude oil, with some countries including Germany arguing that the bloc is too dependent on Russia’s fossil fuels.
In other news, Saudi Arabia has warned it would not bear responsibility for disruptions to global oil supply following attacks on its oil facilities by Iranian-aligned Houthis.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through $126.42 will reaffirm the uptrend. A move through $92.20 will change the main trend to down.
The short-term range is $126.42 to $92.20. The market is currently testing its retracement zone at $109.31 to $113.35.
The intermediate range is $85.81 to $126.42. WTI crude is trading on the strong side of its retracement zone at $106.12 to $101.32, making it support.
The main range is $61.86 to $126.42. Its retracement zone at $94.14 to $86.52 is the major support. It stopped the selling at $92.20 on March 15.
Daily Swing Chart Technical Forecast
The direction of the May WTI crude oil market on Tuesday is likely to be determined by trader reaction to $109.97.
Bullish Scenario
A sustained move over $109.97 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the Fibonacci level at $113.35. This is a potential trigger point for an acceleration to the upside with $126.42 the next major target.
Bearish Scenario
A sustained move under $109.97 will signal the presence of sellers. The first target is the 50% level at $109.31.
If $109.31 fails then look for the selling to possibly extend into the retracement zone at $106.12 to $101.32.
Side Notes
Trader reaction to $109.31 to $113.35 is critical to the near-term structure of the market. Aggressive counter-trend sellers are going to try to form a potentially bearish secondary lower top on a test of this level.
Bullish trend traders are going to try to trigger a breakout over $113.35 with $126.42 the primary upside target.
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