- The West Texas Intermediate Crude Oil market got a little bit of a bounce on Friday as the job number in America came out with over half a million jobs for the month of July.
- The market is speculating that there will be more demand for crude oil than they had thought 24 hours earlier due to the fact that more people are working.
- Whether or not that’s true is a completely different question, but at this point, it looks like the market is willing to buy that story for the moment.
Still in a Downtrend
You should also keep in mind that perhaps short-sellers took profit heading into the weekend, so that is something worth paying attention to as well. The fact that we are still below the $90 level will weigh upon the idea of bullish narratives, so that is also worth watching. Ultimately, this is a market that has been in a downtrend for a while, so it does make a certain amount of sense that we would continue to go lower.
When you look at this chart, is easy to see that the sellers continue to come back into this market, so I think that this short-term rally will probably get sold into. If we break down below the bottom of the candlestick for the session on Friday, it’s likely that we go lower, perhaps reaching the $80 level underneath. The $80 level is an area that will attract a lot of attention, but quite frankly I just don’t see how that means anything other than a short-term bounce.
If we are truly going into some type of major recession, oil will continue to get hammered. When you look at this chart, you can see that we have been in a bit of a downtrending channel, and it appears that we are going to continue that same overall behavior. Ultimately, I have no interest in buying oil anytime soon, due to the fact that it seems as if all commodities are continuing to sell off, and of course, oil is right in the front when it comes to recessionary concerns. Ultimately, it’s worth noting that we are below the 200ay-d EMA, so it does make quite a bit of sense that we would see further negativity.
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