The WTI Crude Oil markets gapped higher at the open on Monday, primarily in reaction to the Russian invasion of the Crimean peninsula, which of course has repercussions as far as risk appetite is concerned around the world. Further compounding the issue is the fact that Russia is a major exporter of crude oil, and this of course is a concern since there are possible economic sanctions coming for the Russians. At the end of the day though, I believe that some type of embargo on Russian oil is a pipe dream, and as a result this is probably a bit overdone.
There are concerns of war, but quite frankly the war would be at best between Ukrainians and the Russians, as the West seems unwilling to do anything to protect the Ukrainians. At the end of the day, as is looking a whole lot like the Hungarians or the Czechoslovakian issues 40 years ago.
That being said...
That being said, I do think that this is a breakout. I believe that the $104 level being skipped over is significant, and that the market is going to go higher. Quite frankly, I thought the market was going to go higher before the Russians started this. This is essentially the “excuse” that the market needed. That being the case, I believe that ultimately this market is heading towards the $110 level albeit in a choppy manner as there is quite a bit of noise between $106 and $110.
Any pullback at this point time should be thought of as a buying opportunity, as I believe there is a significant amount of basing and support near the $102 level. That being the case, it is not until we break below the $100 level that I would even consider selling this market, something that seems very unlikely at this point in time. Ultimately, I believe that the situation in the Crimean peninsula cools off, but quite frankly this market always wanted to go higher in the end, and that’s exactly what we are seeing: built up inertia breaking out.
