The WTI contract has an interesting session on Monday. The market originally fell, but as you can see on the chart, bounced back in order to form a hammer that stopped just at the top of the gap from last week. In other words, the markets have filled the gap, and now it’s time to see if there is any real underlying bullishness in the contract.
The $92.00 level is important in my opinion. It isn’t trend changing important, but important none the less. The market will need to overcome the level in order to continue higher. The shape of the candle suggests that the buyers are trying to step up their game to push this market much higher. The market could find itself in a range that we could see over the course of the summer.
The range will more than likely find support at the $90.00 level, with the resistance to be found at the $96.00 level. The upper part of the resistance will be at the $98.00 handle as that is the top of the cluster of noise higher.
The Federal Reserve
The Federal Reserve continues to ease its monetary policy, which of course should weaken the US dollar. While there are a lot of moving parts at the moment, this will eventually serve as a reason for traders to buy oil again, and this will be part of the bullishness that we see over the summer. The range will simply be a measure of a few different things, and the Fed and its policies will certainly be one of them.
The other such factors will be US strength. After all, there was a stronger than expected jobs number for the month of February, and if there is more hiring going on in the US, then it means that there will more than likely be more manufacturing going on, of which there is normally more demand for oil. This is why sometimes you see the WTI contract outperform the Brent contract and vice versa. The WTI is a more North American-centric blend, and as a result will track the US/Canadian economies.