- The West Texas Intermediate Crude Oil market has fallen rather hard during the Friday session, as we head into the weekend.
- This suggests that we are going to continue to see a lot of questions being asked about demand, as there is almost certainly going to be a global recession.
- Because of this, the market would expect less demand for the product, as crude oil tends to be the “life’s blood” of the global economy. In that sense, if there’s less need for the transportation of goods and services, then it goes to stand that there will be less demand for crude oil itself.
It might be worth noting that the market closed higher for the week, so it does look like we are trying to stabilize a bit. We have sold off quite relentlessly for a while, and the fact that we bounce a bit at the end of the session on Friday, suggests that we may try to get back to the $80 level, but the 50-Day EMA comes down from above to offer a bit of resistance. Alternatively, this is a market that I think will continue to see exhaustion eventually, so rallies should offer shorting opportunities.
Noise Ahead
If you break down below the bottom of the lows for the Friday session, it’s likely that the market could go down to the $70 level. The $70 level courses a large, round, psychologically significant figure, and an area that we need to pay close attention to. If we were to break through there, things can fall apart rather quickly. I believe at this point, the market is likely to be very noisy, as we are trying to figure out whether we are going to go into some type of deep dive from an economic standpoint, or if we are going to recover.
It’s somewhat obvious that the economic situation could be very noisy, so I think it is the best-case scenario that you will be very cautious with your position size, especially as we head into the last 2 weeks of the year when volume and volatility go hand in hand. Traders will start to worry about the holidays and spend less time worrying about the markets. However, if we get some type of headline that crosses the liars, that could throw the market into a complete tizzy.
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