The WTI Crude Oil markets continue to look a bit weak overall, as the market seems to be content sticking around the $94 level. This area looks as if it could be a bit of accumulation, or possibly the calm before the storm so to speak, as we go lower. Because of this, it is a bit difficult to estimate where this market is going, because I feel that it has fallen so hard, so fast that a continuation of the downtrend would take another headline or two to really shock the markets. My guess is that it would take a strong labor number out United States in order to send the market down sharply again, so therefore I believe that this is more or less going to be consolidation with the potential to become accumulation.
That being the case, I think if we can get above the $95 level, we will more than likely see this market head to the $98.50 level as it is the next significant amount of resistance. Above there, we have the $100 level, which of course has a psychological significance to it being a large round number, and that will be very difficult to overcome in my estimation.
The Federal Reserve controls the oil markets at the moment.
I believe that the Federal Reserve will control the oil markets via the value the US dollar. The entire world focuses on whether or not the Federal Reserve can taper off of quantitative easing, and there seems to be a lot of confusion as to what the parameters are going to be. After all, the Federal Reserve has stated that employment is their biggest concern at the moment, and that being the case I believe that a strong jobs number in a couple of weeks could send this market much, much lower. That would be because the US dollar would more than likely skyrocket in value. On the other hand, there is also the possibility that demand could be seen as picking up because of better employment numbers, which could send this market higher. In other words, expect a very, very bumpy ride and I still believe that a playing oil via the options market is going to be the best way to go simply because it's going to be the safest way to go. In the very short-term though, I suspect the day traders will do quite well buying and selling in this very tight range, simply going back and forth.
