The West Texas Intermediate Crude Oil market gapped higher to kick off the trading session on Wednesday, as we have gone back and forth in order to fill the gap and of course rallied just a bit. This is a market that looks as if it is going to go sideways for a while, which makes sense considering that we not only have to worry about the inventory numbers overnight, but we also have to worry about the jobs number coming out on Friday.
Furthermore, the $75 level above continues to offer psychological resistance and will attract a lot of headlines if we get above there. If we can break above the $75 level, then the market is likely to go much higher, perhaps reaching towards the $77.50 level, as the measured move of the ascending triangle suggests. Furthermore, the 50-day EMA is starting to race towards the current price action, so it is likely that we will continue to see plenty of buyers underneath. Furthermore, the $70 level is an area that a lot of people have to pay attention to as well, so I think it is only a matter of time before the buyers come in to pick this market back up.
On the other hand, if we get a daily close above the $75 level, then I think it opens up plenty of fresh money into the market. The measured move does suggest that we could go towards the $77.50 level, but I also believe that we have the ability to go much higher. The $80 level above is more likely than not going to be the target given enough time, but we probably have a lot of volatility to chew through between here and there.
When you look at the overall situation, it is obvious that demand should be picking up as economies around the world reopen, and we have to come to terms with the fact that a lot of production had been shut down over the previous year. Because of this, the market is likely to continue seeing upward pressure over the longer term and look at pullbacks as a potential gift for those who are more long-term-minded. Beyond all of that, oil is a major indication of inflation, so this also has a bit of a ripple effect through other markets.
