- The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Thursday, as OPEC has sliced production by 2 million barrels per day.
- The question is not so much about that cut, because it was a well-known possibility, but whether there’s going to be enough demand going forward.
- After all, if the global economy is going to fall apart, then it’s very difficult to imagine that there will be a lot of demand for oil.
We are attempting to break outside of a down-trending channel, especially as the 50-Day EMA is in that same vicinity. The $88 level has been broken, and now it looks like we might try to make a move toward the $90 level. The 5200-Day EMA is near the $92.50 level and is showing signs of tilting lower as well. Ultimately, this is a market that I think has plenty of reasons to roll over, but at this point, it’s also worth noting that if supply is constrained by OPEC, that could give us a little bit of a boost.
Though Days Approaching
Keep in mind that the US dollar has a certain amount of influence as well, since the market is priced in those very same US dollars. The market has been in a downtrend for some time, so if this is a situation where we are going to continue to see a lot of noisy behavior, and perhaps selling pressure. If we break back below the $85 level, then it’s likely that we go down to the $80 level, followed by the $75 level. It certainly looks as if we are trying to pick up quite a bit of momentum, so this is a situation where we should see a lot of volatility, and with the jobs number coming out on Friday, that will probably only add to the speculation not only in the US dollar but the idea of how much energy will be needed.
Buckle well, we probably have a couple of tough days ahead of us, but it’s possible that we may have some type of clarity by the time we get to the early part of next week. We will also have to pay close attention to the CPI numbers next week, because I will have a lot to do with the Federal Reserve monetary policy which could also slow down the economy or perhaps release it.
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