The WTI Crude Oil markets fell during the majority of the session on Wednesday, but found the $99 handle to be significantly supportive to cause the market to bounce and form a hammer. I really like the look at this hammer, because it is the perfect shape, and it is exactly where I would like to see one form. This tells me that the market is more than likely going to continue to find buyers, and we even got some economic news out the United States that indeed suggests that demand for light sweet crude could pick up.
With the ADP report coming out stronger than anticipated, it suggests that employers are ramping up hiring, which of course should ramp up demand when it comes to the manufacturing and industrial base of the United States. On top of that, you have more goods and services moving, so of course transportation will demand more crude oil, and then on top of that you have workers driving more as they are out and about doing things. All in all, it is a good sign for light sweet crude demand.
It isn’t a clear shot higher though.
The market has plenty of noise above, and because of this I feel that the market will struggle to make a smooth move higher, but it should none the less. The $102 level is the next major resistance point in my opinion, and I see no reason why we won’t head towards it given enough time.
Keep in mind that this Friday as the nonfarm payroll number, so the markets could be a little bit cautious between now and then, but at the end of the day I don’t see any reason why the $102 level will be that difficult to obtain. On top of that, I believe we will ask a try to grind higher, heading towards $103 level. Ultimately, $105 is probably calling, and a break above there could send us much, much higher. However, between now and Friday numbers it could be a little bit dicey but I am willing to put a small position on to the upside if we can break the top of the hammer.
