The West Texas Intermediate Crude Oil market continued to show signs of strength during the trading session on Friday as it tried to break towards the $75 level. I think given enough time we will almost certainly see that happen. If and when we do, it is very likely that we will eventually break out above it. Breaking out above the $75 level opens up the possibility of making a fresh, new high yet again.
The crude oil trade is one of the most oversubscribed on Wall Street, but it is all about the reopening trade, which has a lot of influence on commodities in general. At this point, it does not look as if oil is ready to give up its stranglehold on the imagination of traders. If we break out to the upside, then it is very likely that we will go looking towards the $80 level eventually. That being said, there is also the opposite situation that could happen, and you have to keep that in the back of your head.
If we were to break down below the 50-day EMA and the $70 level, then it is likely that we would go looking towards the $65 level where we had bounced from previously. I do not see that as very likely, but if we did have that happen, it would be extraordinarily negative for this market, sending oil much lower and perhaps plunging the commodity trade lower right along with it. The one thing that may cause oil to slip a bit could be a strengthening US dollar, and perhaps fears of the Delta variant slowing down the world’s economy.
That being said, you should keep in mind that the WTI grade is typically thought of as the “American grade”, meaning that if certain parts of the world slow down but at the same time America keeps going, then it may completely ignore that Delta issue. It does not look like America has the appetite to lock back down, so I think the Delta variant concerns will be just a distant memory when it comes to this market. Buying the dips has worked for some time, and I expect it to continue to work going into the future.
