U.S. West Texas Intermediate crude oil futures are trading lower late Wednesday after a government report showed another big increase in gasoline and distillate inventories and as crude production rose to a new record level.
U.S. gasoline stockpiles last week rose to their highest level since February, while distillate inventories jumped to their highest level since September 2017, according to the U.S. Energy Information Administration (EIA).
The EIA report also showed crude production for the week-ended January 10 rose to 13 million barrels per day (bpd).
At 20:26 GMT, March WTI crude oil is trading $58.04, down $0.23 or -0.38%. Earlier in the session, the market hit its lowest level since December 6 when it traded down to $57.42.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The main trend will change to up on a trade through $65.40. This is highly unlikely so the next best thing to do is to start watching for a closing price reversal bottom. This chart pattern won’t change the trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally. The next target bottom is $54.85.
The main range is $50.18 to $65.40. Its retracement zone at $57.79 to $55.99 is the next key target and potential support zone. Counter-trend buyers came in earlier today when buyers tested this zone at $57.42.
The major 50% level at $58.80 is potential resistance.
Based on the earlier price action, the direction of the March WTI crude oil contract into the close is likely to be determined by trader reaction to the 50% level at $57.79.
A sustained move under $57.79 will indicate the presence of sellers. Taking out the intraday low at $57.42 will indicate the selling pressure is getting stronger. If this move creates enough downside momentum then look for the selling to possibly extend into the Fibonacci level at $55.99.
A sustained move over $57.79 will signal late session buying. Crossing to the strong side of yesterday’s close at $58.26 will indicate the buying is getting stronger. This will also put the market in a position to post a closing price reversal bottom.
The next two potential upside targets come in at $58.80 and $59.06. Crossing to the strong side of the angle at $59.06 could trigger an acceleration to the upside.
This article was originally posted on FX Empire
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