U.S. West Texas Intermediate Crude Oil futures rose on Wednesday after a government report showed a drop in U.S. crude oil and distillate stocks. Gains were limited, however, by a rise in gasoline stockpiles. The report also showed refiners picked up processing rates.
Traders said the bullish news that helped facilitate the drawdown was a rise in exports and a drop in imports. Net U.S. crude imports fell the week-ending September 25 by 536,000 barrels per day to 1.6 million bpd.
At 21:02 GMT, December WTI crude oil futures are trading $40.11, up $0.55 or 1.39%. This is up from a low of $38.95.
Wednesday’s price action indicates that traders want to keep the market in a trading range despite the previous session’s steep sell-off. Helping to generate support for the market is the OPEC+ production cuts, while coronavirus concerns continue to cap prices.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $37.11 will change the main trend to down. The main trend will change to up on a move through $42.02.
The main range is $44.33 to $37.11. Its retracement zone at $40.72 to $41.57 is providing resistance.
The short-term range is $37.11 to $42.02. Its retracement zone at $39.57 to $38.99 is generating the support.
As I mentioned earlier, Wednesday’s price action indicates investors are content with holding the market in a range. With OPEC+ underpinning the market, there seems to be no real fear of a washout to the downside so traders appear to be getting comfortable buying the dips.
Gains are being limited by a resurgence in COVID-19 cases, but the price action indicates investors are learning to adjust to expectations of lower demand. They seem to be content with holding prices in a range while awaiting the arrival of a successful coronavirus vaccine.
Support has clearly been established at $39.57 to $38.99. This is likely to hold over the near-term unless there is some kind of demand shock, or supply unexpectedly begins to rise.
Resistance is $40.72 to $41.57. This is expected to hold until there is another fiscal stimulus package, a vaccine is created, or there is a supply disruption because of war or a strike in Norway.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire