The WTI market had a slightly positive session during the Tuesday trading hours, but did not break above the $91.00 level, an area that I would've liked to seen broken to the upside in order to start buying again. I certainly see that the $90.00 level should offer plenty of support, and probably down all the way to $85.00 as well. With that being the case, I'm not willing to start selling this market, and in fact actually believe that we will see a significant pop at this point.
One of the main reasons I think so is that the Brent market looks extraordinarily strong at this point, and has a much easier path than this one. Because of this, I think that oil in general should go higher, although this one may underperform some of the other oil markets around the world. If that's the case, it will be more but grind higher, and I do think that we will eventually find ourselves in a trading range of $90.00 to roughly $95.00 going forward. We could go higher, perhaps as high as $98.00, but in the end I think the last $2.00 of that area would be difficult to overcome.
Watch the US dollar
One of the biggest reasons this market has fallen so drastically over the last couple of weeks in my opinion has been the strengthening of the US dollar. Simply put, the more valuable the US dollar is, the less of those Dollars it should take in order to buy a commodity. This has been seen in both the oil and precious metals markets, and as a result everything suddenly getting "cheaper."
If we start to see more selling of US dollar, then we could see this market gain serious strength. Going forward, there are several things to be concerned about as far as risk is concerned, not the least of which is the death of Hugo Chavez, leader of Venezuela. As he died during the session on Tuesday, there is still going to be some concerns about whether or not the flow of oil will continue out of that very important OPEC nation. After all, they supply a significant amount of crude oil to the Americans, by far one of the largest markets in the world for energy. If that's the case, that could cause a sudden shock that would send prices much higher.