The West Texas Intermediate Crude Oil market rallied a bit on Wednesday but gave back all of those gains as Jerome Powell did not walk back his inflation comments. Furthermore, we have the OPEC meeting going on currently, and the headline risk is rather crucial, as traders are waiting to see whether or not OPEC will continue to increase output, or if they are going to cut back on production. With the way oil has fallen recently, there is a bit of a question when it comes to that.
Looking at the chart, the bottom of the candlestick from the Tuesday session also sits right on top of the uptrend line that I have marked on the chart, so I think it is worth paying attention to. It is also worth paying attention to the fact that we pulled back directly from the 200-day EMA, so the question now is whether or not crude oil has further to go to the downside. From a technical analysis standpoint, it certainly looks as if we could have even more negative pressure.
That being said, if we were to turn around and take out the top of the candlestick from the Wednesday session, that would be an extraordinarily bullish sign. I think the only way that happens is if OPEC does come out and say that they are not willing to increase production. If that is the case, then it is very possible that we could see this market turn around. I believe that we should have a longer-term move coming rather soon, but with the entire market leading to the downside, OPEC could be ready to turn things around. If they do, this could be a violent rip to the upside.
Pay attention to the US dollar, because it is starting to strengthen, and that could cause some issues as well. This is a market that continues to see itself as being on the precipice of something big, so I am definitely watching this market over the next couple of days for the next sign of momentum. It is worth noting that we have oversold this market quite drastically, so unless we get something extraordinarily bearish for oil, it may be difficult to break it down.
