WTI Crude Oil
The WTI Crude Oil market rose slightly on Friday, as we await the results of the OPEC and non-OPEC members meeting over the weekend. There is discussion of a potential production cut, and that of course would help add potency to the OPEC countries themselves cutting back. This of course will drive the value of oil higher for the short-term, but there does come a time where it becomes attractive for US and Canadian drillers to expand production. Once they do, it’s only a matter of time before races get driven back down. Because of this, I believe that any positive action with the oil markets will eventually face significant headwinds. However, I am not willing to sell until we get below the $50 handle.
Natural Gas
The natural gas markets rose slightly on Friday as we continue to see quite a bit of bullishness in this market. We find ourselves at the $3.75 level, which of course is psychologically significant. Any pullback at this point in time should have quite a bit of support all the way down to at least the $3.50 level underneath, and as a result I think short-term buyers will continue to return to this market every time we dip. With this, I remain bullish for the short-term but I recognize that sooner or later the longer-term oversupply issues come back into play, and that will make the round-trip very brutal.
The fact that we broke above the top of the shooting stars from earlier in the week suggests that we are going to continue to see quite a bit of bullish pressure and that should continue to drive this market to what looks to be the most obvious round number target above: the $4 level. At this point, I would be hesitant to short this market, but I will be watching the longer-term charts to figure out when the move has gone too far.
