The West Texas Intermediate Crude Oil market has rallied quite nicely during the trading session on Wednesday, as we continue to see a bit of a recovery in the oil market. At this point, the market has broken a bone on the top of a falling wedge, so from a technical analysis standpoint, it does look like we could have a little bit of follow-through here.
Whether or not it is anything of note will remain to be seen, but right now I anticipate that we probably continue to see the WTI Oil market try to reach the 50-Day EMA, which is close to the $81 level. Breaking above there then opens the possibility of a move to the 200-Day EMA, which is closer to the $88 level. After all, we have been in a situation where we have seen a lot of selling pressure, so I do think that a little bit of a bounce makes a certain amount of sense.
Be Cautious About Getting Overly Excited
Furthermore, supply as far as the physical market is concerned has been constrained for a while, and it is probably only a matter of time before we see this market take off again. However, in the short term, you also must think about the fact that we are heading into a global recession, so upward momentum is probably only somewhat available. After all, we are going to continue to see global growth get destroyed, it’s very likely that we could see the market struggle with higher pricing. The crude oil market looks as if it is trying to bottom, at least in the short term. However, you can also make a big argument that it’s the end of the year, and some of this might be a simple matter of liquidity disappearing.
Because of this, I would be a bit cautious about getting overly excited about any move to the upside, at least until we get some type of fundamental change in the overall outlook for the global economy. With that, I think you got a short-term bounce of the next couple of days, maybe even weeks, but not much has changed from a longer-term fundamental point of view. Most big traders are probably simply taking profits from short positions over the last couple of months, and as we get closer to Christmas, fewer and fewer people will be involved.
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