WTI Crude Oil Forecast: Continue Testing Support - 7 February 2020

Christopher Lewis

The West Texas Intermediate Crude Oil market went back and forth during the trading session on Thursday as competing headlines continue to throw the market around. Ultimately, this is a market that tried to get above the $52.50 level but could not do so. Ultimately, breaking above there would be a good sign but we could not do so during the trading session on Thursday. There is a certain amount of noise just above there as well, and therefore it’s likely that the market will continue to find sellers in general.

To the downside, I believe that the $50.00 level underneath will offer support, but if we are to break down below there again it could send crude oil much lower. A lot of this is going to come down to the jobs figures coming out on Friday, and of course the slowdown in China due to the coronavirus. The lack of demand coming out of China, supposedly being as much as a 20% loss, could continue to be an issue. If the world’s largest consumer of crude oil is going to drop its demand, that most certainly will exacerbate a situation where we already have a lot of supply in the market, so therefore it’s an issue that will continue to cause pricing problems. I believe that rallies will be sold at this point, at least until OPEC decides to do more of a production cut, which is something that Russia is sitting on the sidelines about trying to weigh what the actual damage of the coronavirus is going to be longer-term. As OPEC failed to come to any type of immediate production cut, it’s likely that the market will continue to punish crude oil forward, but we are a bit oversold so at this point I would look for short-term opportunities more than anything else. Day trading is probably as good as it gets right now, and you can expect a lot of noise as it is difficult to wait on some type of either break out or break down. It looks very likely that we are going to simply chop around over the next couple of days with the wildcard of course be in the jobs figure.

Crude oil

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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