February WTI crude oil futures are on the bull, posting in the neighborhood of a $2.50 rally and putting in a test of the $46.00 level. Traded volumes have been heavy, featuring more than 475,000 contracts of February WTI changing hands at the midway point of the session. For the time being, WTI crude has erased Monday’s losses in an explosive trend-day up.

Due to the Christmas holiday, the weekly crude oil inventory cycle is slated to kick off one day later than usual. This afternoon will bring the API stocks release with the EIA report scheduled for Friday morning.

February WTI Crude On The March

To say that the final trading week of the year has been extremely active is a vast understatement. Aside from the record-setting plunge in U.S. equities, Monday’s sell-off in WTI was the premier financial story of the day. February WTI crude futures lost $2.77 amid panic-like shorting.

Today has been a completely different story. At press time, WTI has been bid north by more than $2.50 per barrel. For the moment, there are only a few levels on my radar:

• Resistance(1): 38% Retracement, $46.62
• Support(1): Swing Low, $42.36
• 2-Way Catalyst, $45.00

Bottom Line: For the remainder of the week, I expect this market to enter a period of consolidation in the $45.00 area. However, in the event February WTI continues the bull run, a shorting opportunity from the 38% daily Fibonacci retracement will come into play.

As long as the Swing Low ($42.36) remains valid, I will be looking to short from beneath the 38% current wave retracement at $46.54. With an initial stop at $46.79, this trade produces 25 ticks when using a 1:1 risk vs reward management plan.