The West Texas Intermediate Crude Oil market fell significantly to kick off Wednesday, as traders were looking to work off some of the massive gains. That being said, though, the market is going to continue to see a lot of “buy on the dip” attitude, especially as the inventory numbers during the trading session on Wednesday were much more bullish than anticipated, showing that there is a significant amount of demand out there still.
As the world stopped pumping for crude oil during the pandemic, it suggests that we are going to be stuck with a lack of supply, so it does not suggest that the market is going to be able to knock the price back down for any significant amount of time anytime soon. This being the case, the market is likely to continue to be a “buy on the dips” scenario as mentioned previously, not only in the short term, but more likely than not the longer term as well. I believe the $85 level will get targeted, as it is a large, round, psychologically significant figure, but it would not surprise me to see it broken above. I think given enough time we will probably go looking towards the $90 level, and I believe that the $80 level underneath will be significant support. I previously had anticipated that the $75 level would be massive support as it was a previous resistance barrier, but I do not think we get there anytime soon.
Energy is a major issue for markets around the world, and I think you need to pay close attention to this chart because it is going to continue to be where most people price in inflation, as it is the spear tip of that nasty problem. The US dollar continues to fall, so that will also put upward pressure on the crude oil market. The shape of the candlestick is rather bullish, and I think it is only a matter of time before we continue to see plenty of buyers jump back into this market, as the reaction was so strong that this could be the beginning of yet another impulsive move to the upside. The market is winding up for yet more momentum.
