According to a Tuesday note from Fairlead Strategies, oil prices could be due for a rebound.
The potential for an oversold bounce that lasts at least two weeks is supported by the confirmation of a short-term counter-trend buy signal on Monday.
A long-term trading range has taken hold with support near $85 per barrel and minor resistance at the 50-day moving average after a break of long-term support.
The 50-day moving average of the crude is currently $94 per barrel, which has the potential to increase in the future.
The bullish technical view on oil received a fundamental boost on Tuesday after a report said the Biden administration is considering a plan to refill the Strategic Petroleum Reserve. Last week, the price of crude oil fell to a low.
The potential move by the Biden administration is seen as protecting US oil-production growth.
The Biden administration is trying to balance a surge in oil prices and a surge in inflation against a crash in oil prices that would negatively impact the US-based oil sector.
According to data from YCharts, the Biden administration has reduced US crude oil in the Strategic Petroleum Reserve to about 600 million barrels since the beginning of the year. The move was seen as a way for the administration to make up for the damage done to consumers by the spike in gas prices.
Since June, US gas prices have fallen from an average high of more than $5 per gallon to just $3.71 per gallon, according to data from the American Automobile Association.
If the Biden administration buys more than 100 million barrels of oil at around $80 per barrel, there will be a floor in the oil markets.
Oil prices were basically unchanged on Tuesday despite the higher than expected inflation report.
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