WTI Crude Oil Forecast: Continues to Look Vulnerable

The West Texas Intermediate Crude Oil market has fallen a bit during the trading session on Tuesday to threaten support yet again. The $85 level has been important multiple times in the past, especially over the last couple of weeks. The market looks as if it is going to continue to threaten the downside, and if we were to break down below the $85 level, the floodgates could open, and we could go down to the $80 level.

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Short-term rallies will more likely than not continue to see plenty of resistance, especially near the $95 level. The reason I state the $95 level is that it is not only at the top of the shorter range, but now we have the 50 and the 200-Day EMA indicators sitting in the same general vicinity. Now that the 50-Day EMA is starting to drift lower and possibly cross below the 200-Day EMA, the so-called “death cross” could be forming, which is also a little bit negative when it comes to the overall attitude of the market. Longer-term traders tend to start selling at that point, but ultimately this is a situation where the market continues to struggle overall, therefore the question is whether or not we can break down from here.

Markets Likely to be Very Noisy

• The oil markets are going to continue to be very noisy, mainly because there are a lot of different crosscurrents going on at the same time.
• The first and most obvious one is going to be the fact that people are concerned about whether there is going to be enough demand to drive prices higher.
• After all, the market is likely called to suffer at the hands of a global recession, which is pending.

OPEC is starting to threaten cutbacks, and a rejiggering of supply could cause a bit of a problem. Furthermore, it is possible that the Iranians may have the ability to put oil into the market if the nuclear deal is signed. If that’s the case, we could be looking at an extra million barrels a day. This obviously would have a negative effect on pricing. As far as buying is concerned, I will be thinking about it if we can break above the 200-Day EMA, but that remains to be seen. In this environment, make sure to keep your position size reasonable.

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