WTI Crude Oil
The WTI Crude Oil market initially tried to rally during the day on Tuesday but turned back around as the $38 level offered far too much in the way of resistance. Because of this, and the fact that we get the Crude Oil Inventories number coming out today, I feel that this market is probably going to continue to drop. I also recognize that there are a lot of things working against the longer-term strength of this market, and that we were perhaps a little overbought.
Looking at this market, I think that there is a massive barrier somewhere near the $40 level, as not only is there a bit of technical resistance, but there’s also the concern that US shale oil producers will jump into the market with a massive amount of supply at that level. Ultimately, this has been a very nice bounce but I believe that the downtrend continues.
Natural Gas
Natural gas markets went back and forth during the day, ultimately seeing a bit of a neutral candle. This is a market that is very bearish and the supply is simply far too strong. Because of this, I’m waiting to see some type of exhaustive candle above to start selling again. Natural gas producers in the United States are starting to walk away from drilling, but we are so far away from dwindling supplies, I feel that no matter what, this market will eventually go lower.
I’m simply waiting for that exhaustive candle to take advantage of what is a very well defined downtrend. I also believe that we will make fresh, new lows, but it might take a while to get there. After all, most of the easy money shorting natural gas has already been made over the last several months. This is a market that should continue to be volatile, but most certainly will have a negative bias overall.
