- During the month of November, we have seen more of the same in the West Texas Intermediate Crude Oil market, a lot of sideways action.
- Unfortunately, I think the month of December will probably be very much the same as well.
- That being said, it’s not that traders will be able to make some money in this market, quite the opposite, as its predictability might be one of the biggest benefits of trading it.
As things stand right now, the $65 level looks to be massive support, and it’s probably worth noting that it has held for a couple of years now. I also suspect that OPEC may be involved in the markets currently, perhaps trying to defend the price of crude oil.
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On the upside, we have the $72.50 level offering significant resistance, which has been held for a couple of months now. At this point in time, I would believe that more likely than not we see a lot of sideways action as the world is holding its breath and waiting to see what the new US administration might do, especially when it comes to drilling for more crude oil.
It’s probably worth noting that the Prime Minister of Alberta, a major oil-producing province in Western Canada, has made overtures to the idea of extending the pipelines down into the United States, which would only bring in more crude oil to the market. Granted, most of what Alberta produces is heavier crude oil, but at the end of the day, if there’s more supply, it has an effect on all grades of crude oil. It is well known that Donald Trump is very pro-oil, so therefore I would anticipate over the next year or two that we would see more North American production one way or the other.
It is because of this that I think the upside is somewhat limited, but that doesn’t necessarily mean that the market is going to break down. Oil markets are notorious for finding balance, and I think that’s where we are right now. In other words, I suspect that December will be very similar to November, where short-term range bound trading probably rules the day.
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