Over the last several weeks, the West Texas Intermediate Crude Oil market has rallied rather significantly during the month of July, and now that we head into August, one has to wonder whether or not we can continue to see the upward pressure. There are a lot of different factors at play when it comes to this market right now, and therefore you need to take all of them in aggregate to get an idea of where we’re going.
To begin with, the technical analysis does look a lot like a bottoming pattern. There are multiple reasons for that, not the least of which would be the fact that people are starting to believe that the Federal Reserve can get some type of “soft landing” going in America. That being said, if it’s the case that they can pull that off, then it’s likely that there won’t be much of a recession to work against the value and demand of crude oil. Furthermore, OPEC has reduced output by quite a bit, and of course there is still the lack of Russian crude oil in the West that could offer a bit of support.
Going back to the technical analysis, it looks like the $80 level is being tested. If we were to break above the $80 level, then it’s likely the crude oil will eventually try to get to $90. At this point, I think it does become a little bit stretched, but I do believe that this market will eventually try to get there. During the month of August, I anticipate that we will have more of a “buy on the dips” scenario, and the 200-Week EMA, currently sitting right around the $72 level, could be your short-term floor.
- Do not get me wrong, I fully anticipate seeing a lot of choppy behavior, so those who are more longer-term incline, are going to have to deal with a lot of noise.
- However, it’s very possible that we could have bottomed out.
- Keep an eye on the US dollar, because it does seem to be losing strength over time, and if that’s the case, it could be a bit of a tailwind for cruel pricing as well.
- After all, crude oil is priced in US dollars. There are a lot of reasons to think that we go higher, but that doesn’t necessarily mean that we go straight up in the air.
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