The WTI Crude Oil markets rose slightly during the session on Friday after gapping just a touch lower. That being the case, we still see plenty of resistance at the $104 level, so I do not necessarily think that buying at this point in time is possible. I do understand though that if we break to fresh new highs from the last three days, then we will more than likely reenter the consolidation area that we had been in for so long.
I think that the value of the US dollar will continue to be crucial in this marketplace, and quite frankly it seems as if the traders out in the community are essentially ignoring the supply and demand situation, and simply trading this as a dollar-based vehicle. With that being the case, you also have to watch the US Dollar Index as well, because it is starting to find serious support just underneath the 80 handle.
Do not forget the FMOC meeting minutes
With the minutes of the FMOC meeting coming out on Wednesday, that will have a drastic effect on the oil markets simply because it will perhaps give a little bit of insight as to what the various members of the board are thinking as far as quantitative easing is concerned. We all know that job markets are soft in the United States to say the least, and that is one of the biggest concerns of the Federal Reserve. They cannot taper off of quantitative easing as long as the jobs market is poor.
With the nonfarm payroll number not coming out on Friday, this gave the market an excuse not to move very much during the session. However, I firmly believe that once those numbers come out it will probably be positive for oil in the sense that the US dollar will probably weaken. I still think that we remain in the consolidation area, and it isn't until we get below the $100 level that I even consider shorting, which is something that quite frankly I don't think I'll be doing much of during the next several months anyway.