- The West Texas Intermediate Crude Oil market is basically hanging on by a thread right now, as we had broken through a major support level, but then turned around later in the day to form a bit of a hammer.
- There have been multiple attempts to break down, and the market continues to push higher.
- We have a lot of concerns out there that could have a major influence on what happens in this market next.
Fundamental Factors Affecting the Crude Oil Price Today
To begin with, a lot of people are concerned about global growth. If global growth starts to fall apart, that means that demand for crude oil will continue to be a major issue. As demand drops, the price drops. Yes, there are a lot of concerns when it comes to supply, but at this point in time, it seems like demand is a bigger shock to the system.
One cannot rule out the possibility that OPEC decided to get involved, because member states have stepped into the futures market in order to buoy prices. Remember, OPEC needs this market to be somewhat lively, in order to protect their own economies. If we break down below the bottom of the candlestick, it’s likely that we could go down to the $72.50 level, and then possibly the $70 level. The $70 level courses a large, round, psychologically significant figure that a lot of people would pay attention to, and it would obviously catch a lot of media attention if we broke down below it.
On the other hand, if we were to turn around and take out the top of the inverted hammer from the trading session on Friday, it opens up a move above the $80 level. In that scenario, we probably have a little bit more of a correction, which I think smart money will stop in and start shorting at the first signs of exhaustion. This is a market that continues to be very noisy, and it does seem like it is trying to find some type of bottom, but we clearly haven’t found it quite yet. Expect a lot of choppy and erratic behavior, especially through the rest of the week as we have to pay close attention to the Federal Reserve and expectations around the job market as well as the Core PCE figures.
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