- The West Texas Intermediate Crude Oil market has fallen rather hard during the trading session on Wednesday, as we have sliced through the $75 level, now it looks like we are trying to get back down to the downside.
- The overall long-term downtrend is very much in play, and therefore think we continue to see sellers come in every time this market rallies.
- The 50-Day EMA has offered significant resistance near the $80 level, so it does make a certain amount of sense that we pulled back the way we have.
The crude oil market has to worry about the lack of demand around the world as the global economy slows down. This has been the main theme recently, and therefore we continue to see average Bradley sold into. If we break down below the lows, then it looks like the $70 level will get hammered, sending this market much lower. The $70 level has a lot of psychology attached to it, so don’t be surprised to see a huge fight in that general vicinity. However, we break down below there it could open up a huge move to the downside. Ultimately, I think this is a scenario where we have a lot of concerns when it comes to the idea of global demand, as we have seen a lot of slowing down during the last year, therefore it should call for less use of crude oil. Whether or not we continue to go much lower is completely different, but right now it certainly looks as if we are going to see noisy behavior more than anything else.
The FOMC Meeting Minutes comes out late during the day, and if it looks like the Fed is going to remain extraordinarily tight, it’s likely that we would see demand for crude will continue to drop. We also have the jobs number coming out on Friday, which gives us an idea as to whether or not the Federal Reserve will have to continue to be very tight with its monetary policy. In general, it’s not till we break well above the 50-Day EMA that I even begin to question whether or not we can go long. Even then, I would have to see a lot of other fundamental reasons to get moving.
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