WTI Crude Oil
The WTI Crude Oil market rose during the course of the day on Wednesday, clearing the $30 level. With this being the case, it does show some strength but quite frankly I think there’s more than enough resistance above to keep this market down. Considering that everybody is starting to suddenly suggest that perhaps we found a bottom in this market, the rally hasn’t been very impressive. I feel that signs of exhaustion are to be sold, and I think that will be the case going forward. I believe that the $34 level will be like a brick wall, and we will not get above there anytime soon. Keep in mind that although there is talk about production cuts, OPEC has no control whatsoever over Texas or North Dakota.
Natural Gas
The natural gas markets rallied during the day on Wednesday, bouncing off of the $1.90 level. However, we still remain below the vital $2 level and as a result I feel that this market will eventually find sellers again. I don’t necessarily expect this market to fall apart, but rather break down below the lows of the $1.90 level and just simply continue to drift down towards the $1.75 level. Natural gas is in a very precarious position as there is more than enough supply out there to meet demand. Quite frankly, the United States alone has over 300 years’ worth of energy based upon natural gas by itself (Based upon proven reserves). With that being the case, it’s hard to imagine that this market ever going to turn around rapidly.
At this point in time, I continue to sell rallies as they appear, and of course the occasional breakdown. I would be very surprised to see some type of meltdown, but I think that it is very likely that the downside continues to pick up momentum.