The West Texas Intermediate Crude Oil market rallied again during the trading session on Wednesday, as we have started to recover from extremely oversold conditions. At this point, I suspect that the market is probably going to continue to be very noisy, but I think it’s probably only a matter of time before we see sellers come into the market.
At this juncture, I think the market could see quite a bit of resistance near the $80 level, and then again at the 50-Day EMA. The market continues to see a lot of noisy behavior, and of course, had been sold off quite aggressively. I think at this point we have a lot of people willing to step in and take the prophet, but I also believe that there will be a lot of people willing to short crude oil given enough time. I’m waiting for some type of exhaustion can only get involved, and then I am more than willing to step into this market.
Be Cautious
- It’s not until we break above the $82.50 level that I would consider this a market that I could buy, because quite frankly there are a lot of fundamental problems out there, not the least of which is going to be a lack of demand.
- The world is heading into a global recession, and that of course has a very negative connotation as to where we go next.
- As long as that’s going to be the case, I just don’t see where you can get overly bullish on WTI.
The US dollar could also have a part to play because if it starts to strengthen again, that will almost certainly put more pressure on a market that is priced in that currency. The Federal Reserve has a meeting at the end of the day on Wednesday, and that could come into the picture also, due to the fact that they may try to stress to the markets just how tight they are going to be, and that will only add more pressure on the economy and therefore add more downward pressure on crude oil as less will be needed for transportation and moving goods back and forth. Keep in mind that recently business bookings on major airlines for business travel have started to plummet, and that comes into the picture as well.
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