The WTI crude oil market fell rapidly during the session on Wednesday after the markets took on a real "risk off" type of attitude. Adding fuel to the fire, the Federal Reserve released the minutes of its last FMOC meeting during the Wednesday session, which of course suggested that perhaps some of its asset purchases may be slow down in the future. Note how there was no actual timeframe with this announcement, just a suggestion that it could happen. This have the markets absolutely freaked out, and the US dollar gained drastically against most other currencies.
The fact that this market fell so significantly after that was announced proves in my mind that most of the bullishness in this market has more to do with the Federal Reserve, and a whole lot less to do with the demand for oil itself. After all, firms will try to find ways to use their Dollars in order to buy things that will hold their value. We think of it, oil will always have some type of value, while the dollar could continue to free-fall in an almost unending fashion.
$95.00 has given way
The fact that the $95 level has given way to the sellers is very important. This was the bottom of the consolidation area that we had been in recently, and as a result it does show more weakness on its way. However, we could see an area right around the $94.00 level that does suggest that there is a lot of support in the general "cluster." Because of this, it looks like we will continue lower, but it might be more of a fight than most people anticipate.
The market will more than likely be choppy on the down move, but I think we will more than likely get a fall to the $92 level. The real key to this market will be what the Dollar does, as a cheaper Dollar almost dictates that oil has to go higher. Conversely, if we see the Dollar rally, then we will see oil fall drastically, as it will take more of those Dollars to buy the commodity.