WTI Crude Oil
The WTI Crude Oil market had a very strong session during the day on Wednesday, showing signs of strength yet again. We broke above the $65 level rather easily, and I think we should continue to go towards the $67.50 level eventually. I think that short-term pullbacks will be buying opportunities and should be treated as such. We are bit overextended, but it looks to me as if the market has done the necessary work to put in a bit of a “floor” near the $63 handle. If we can stay above there, it’s likely that the market should continue to go higher, but if we were to break below that level, then I think you need to worry about a move down to at least the $60 level, if not lower than that.
Natural Gas
Natural gas markets are going to be an area worth watching, because we are extraordinarily overbought, and it looks likely that we will see a bit of a selloff. I am interested in shorting natural gas, recognizing that the $3.40 level is very important for the longer-term standpoint. We are also starting to get towards the end of the bullish season for natural gas, and I think it’s only a matter of time before the seasonality starts to wear off. I must admit, I am a bit surprised by the tenacity of the buyers, but although this has been a colder winter than the last couple of years in America, the reality is that we are far oversupplied with natural gas in the country, so it’s only a matter of time before natural gas storage gets refilled and sends markets to much lower levels. The next couple of sessions should be rather important.
