WTI Crude Oil
The WTI Crude Oil market gapped at the open on Monday as word of the production cut agreement between OPEC and not OPEC members was announced. With this, the market looks as if it is going to be bullish, but we may have to pullback in order to fill that gap previously form. The uptrend line should be supportive as well, and as a result I think that the market will find value at lower levels. I believe that we are going to reach towards the $55 level, and then possibly the $60 level. Ultimately, if we break down below the uptrend line, and more importantly the $50 level, at that point I would be a seller. I think longer-term we have issues with supply, but I don’t have any interest in trying to short this market currently.
Natural Gas
Natural gas markets gapped lower at the open on Monday, testing the $3.50 level below. We turned around to form a hammer like candle, but the gap above will offer resistance. Ultimately, most gaps get filled in the futures markets, so it would not surprise me at all if we reached to do exactly that. The $3.50 level should be supportive, but if we break down below the bottom of the hammer for the day on Monday, I believe that the market would then reach towards the $3.25 level below. Ultimately, the markets will see some type of bullish move, but we may have to bounce around in this general vicinity. Longer-term, I still think that there are plenty of structural issues when it comes to the oversupply of natural gas, but right now we have no interest whatsoever in selling as the bullish pressure is obvious at this point. But remember this: the higher prices will attract more drillers in both the United States and Canada.
