The WTI Crude Oil markets fell during the session on Thursday, but as you can see found the $94 level to be supportive yet again. This is an area that has been supportive and resistive in the past, so it’s not very surprising that the market did in fact react to it. However, I believe that this market will struggle a bit in this general vicinity because of all of the noise that you can see all the way up to the $96 level. After all, there are lot of headwinds out there fundamentally when it comes to the crude oil markets, not the least of which being Libyans coming back online and providing more supply to the world’s markets, and now there is concern that the Iranians could flood the market with more supply if the nuclear talks progress in a positive manner.
Noise above.
With all those fundamental reasons to believe that oil markets will continue to struggle, we also have technical reasons to believe that the market is going to continue to struggle as well. When you have both fundamental and technical reasons working against the price of the commodity, it’s hard to get bullish about anything. While I do recognize the fact that we have a little bit of support below us, I truly believe that it’s going to be easier to short the oil markets at higher levels than it will be to buy them down here. After all, it’s only going to take one or two headlines to throw the market right back into disarray.
Looking forward and into the future, I believe that at the $91.50 level gets broken to the downside, we will test $90 rather quickly, where the real fight will begin. If that level does give way, I suspect that this market will come completely undone. There are several different things that could cause it, one of which could be simply the value of the US dollar strengthening in case the Federal Reserve does in the tightening further. Either way, I’m a net seller but not at this level.
