Crude Oil Price- Feb. 6, 2014

Christopher Lewis

The WTI Crude Oil markets gapped higher at the open on Wednesday, but as you can see we essentially went back and forth, banging around in a relatively tight range. After all, we have the nonfarm payroll numbers coming out on Friday, and as a result it’s probably the wrong time to throw a bunch of money into the market. Most traders are waiting to see what happens with the employment numbers before placing any large bets in my opinion, and as a result I think will basically go sideways for the next couple of sessions.

The $98.50 level as you can see has offered resistance lately, just as the $96 level has offered support. However, I believe that the markets will base the next move on what’s going on with the employment numbers because of the possibility of getting a read on future Federal Reserve moves. The tapering off of quantitative easing has been slow, but at the end of the day the one thing that seems to be concerning the central bank more than anything else is employment. With that, the question then becomes how many jobs the United States is actually producing?

A couple of theories, higher oil prices.

There are a couple different things he could happen, as far as the employment numbers are concerned. There is the possibility that the jobs number comes out weaker than anticipated. Initially, I believe at that point in time the market would selloff as oil would be in less demand. However, eventually the US dollar weakening would sooner or later drive the price of oil and other commodities higher. On the other hand, we could have a strong jobs report, which would strengthen the US dollar, and possibly drive down the value of oil in a knee-jerk reaction. Nonetheless, when you look out at the longer term, this should be positive for oil as well, as demand from industry should increase in a situation where they are hiring more people. After all, more employed people means more consumption, which of course means more demand.

Crude Oil 2614

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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