Crude Oil- May 6, 2013

Christopher Lewis

 



The WTI Crude market had a great showing on Friday in reaction to the better than expected Non-Farm Payroll number in America. This lead to a bullish rally in almost all markets, with the US indices and the commodity markets being especially strong. With this of course was a rally in the WTI market, and as a result we managed to break above the $95 level with relative ease.

 The level was an area that I thought would be resistive, but the fact that it wasn’t shows just how strong this move had been. Of course, the revisions in the labor market would have been very surprising, so of course there was a bit of a knee-jerk reaction during the session – that quite frankly wasn’t corrected.

The market will try to find a range soon, and to be honest I thought the top would be the $95 level. Since we have broken above that level, I will obviously have to rethink this. However, there does come a point that higher oil prices become a problem, and I think that the market won’t be able to go higher than roughly $102 or so. The economy in the United States will be very sensitive to the value of oil, and going to high will stop everything in its tracks.

 
Summertime

The summertime typically brings a lull in the volatility in this market. The summer this year shouldn’t be too much different, but only time can tell. Because of this, I think we will eventually see a range from roughly $100 on the upside, (yet to be proven) and the $90 level on the bottom. This pair tends to like to be range bound and trade within a $10 range historically. If you look back at the charts, you see a clear $10 range over and over.

Of course, there are always possible negative or positive headlines, but the news flow seems to be slowing down as the markets in general aren’t as crazy as they were just six months ago. The overall attitude of stock markets can give you an idea of how this market may do as well.


Crude Oil- May 6, 2013

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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