WTI Crude Oil rose during the session on Friday, but as you can see we more importantly broke above the $100 level. Because of this, I feel that this market will continue to go higher, and that we are about to attempt to break into the previous consolidation area from back in October. This would be a move above the $101 level, heading towards the $104 level.
Bouncing around in this area is probably what we will do in the beginning of January, but with the lack of liquidity that the markets will have, I have a hard time believing that will break out above that during the session today. In fact, a pullback would not be a surprise at all. I would use that pullback as a potential buying opportunity if we saw some type of support, especially around the $99 level.
Wrong time of year
This is the wrong time of year to place any large positions, simply because there aren’t enough traders out there to move the markets for any significant amount of time. Nonetheless, I do feel that this market is about to go higher. Any pullback should see plenty of supportive action below, probably going all the way down to the $95 level. A move down there should attract value hunters, and as a result I think that this market could more than likely be the imitation for buyers to reenter this market. But you have to keep in mind that the real liquidity probably will not enter the marketplace until after the nonfarm payroll report during the month of January.
There are enough reason to stay out of the market between now and then that I do not expect to see anything significant, but of course the odd headline can come into play. Pay attention to the value the US dollar, if it suddenly skyrockets in the Forex markets, we could see the oil markets fall in response. However, that of course would take some type of headline out of the Federal Reserve in my opinion to begin to happen. Generally, I am on the sidelines, but also have an upward bias for the longer term.
