The WTI Crude market had a positive showing on Thursday, as we continue to grind up against the $93.00 level. In fact, we may so close above that for the first time in a couple of weeks, and this of course is a bullish turn of events.
Having said all that, I still see that this market looks like it's trying to enter some type of consolidation going forward. I believe that the $96.00 level above will still offer quite a bit of resistance, and as a result I don't think that we are going above that level. Another reason that I think this is the cases that the US dollar has done so well lately. As the US dollar strengthens, quite often this market will drop as the barrels are priced at dollars after all. If that's the case, it simply takes less of them to buy a 55 gallon drum.
On the downside, I think the $90.00 level looks pretty supportive. In fact, we formed two hammers off of it last week, and that is where we started the move higher that led us to where we are now. Essentially, I am thinking that a $6.00 range is what we are going to be stuck with in the near-term. That's okay, this market tends to be very technical, and these setups make for excellent intraday trading.
Warmer temperature, higher oil prices
Normally as temperatures rise in the United States, we begin what is known as the "summer driving season." Traditionally, use of light sweet crude oil will ratchet up rapidly as more and more is needed for gasoline refiners. As the economy in the United States seems to at the least be stable, you can expect that the closer we get to summer the more likely oil prices will rise from a simple supply and demand equation.
However, I still think it's going to be difficult to see oil above $100 a barrel. Even if we get up above the range that I see at the moment, once you hit the $100 a barrel range, it starts making the news in America. When that happens, people become much more conscientious about the price of fuel, and therefore start cutting back. In a sense, its how this market gets balanced out.