The WTI Crude Oil markets fell hard during the course of the day on Wednesday, as the market finally broke down below the $92.00 handle. Because of this, I believe that we are starting to see another leg lower in this market, and that we will eventually target the $90.00 handle. That area of course is a large, round, psychologically significant number, which means that it will have quite a bit of support. With that, the market looks like it’s ready to reach for that level, and then perhaps make a more long-term decision.
In the meantime, I believe that selling rallies on short-term charts will continue to be the way to go in this marketplace. I would be a little bit concerned about trading in the futures market, simply because if you are wrong it gets very expensive. However, options would be the way to go as far as I can see, or if you have the ability – CFDs.
Demand is an issue.
Lately the inventory numbers have not been very bullish, and I don’t see this changing anytime soon. Granted, the US economy is doing better than many others, but the Americans are a bit of an anomaly at this point in time, and quite frankly we have more oil than we know what to do with in the United States. On top of that, it seems that the Americans are finding more oil every day as well. In other words, a lot of the drivers of oil prices in the past may be changing and this chart might be an expression of that.
Regardless, I do believe that the $90.00 level will offer quite a bit of support, and I would fully expect to see a nice bounce from there. Even if we broke down through there, I don’t think it’s going to happen in one move. A bounce and then continued selling pressure might cause that to happen, so when I’m looking at is selling short-term type situations and trying to take profits as quickly as possible. As far as buying is concerned, I have no interest.
