WTI Crude Oil Forecast: Pull Back After Extended Run

Christopher Lewis

Given enough time, this is a market that will not only find buyers on dips but also break out above the $85 level.

The West Texas Intermediate Crude Oil market has pulled back quite a bit after an extended run over the last couple of weeks, which was something that has been needed for a minute now. That being said, I think that the market participants will continue to see this as an opportunity to find “cheap oil”, in a market that has been extraordinarily bullish. With this, I think that the $80 level should continue to offer plenty of support, but even if we break down below there the $75 level comes into the picture as potential support. With interesting about this level of course is that it is not only the previous highs, but it is also where the 50 day EMA currently sits.

I do believe that given enough time, this is a market that will not only find buyers on dips but also break out above the $85 level. If and when it does, the market is very likely to continue going higher, perhaps reaching towards the $90 level. I do not have any interest whatsoever in trying to short this market, so it simply a matter of waiting for value that I take advantage of. The supply and demand issues in this market continue, so it is almost impossible to think that suddenly things are going to change. Yes, we may get a significant pullback, but at the end of the day it is only going to be a buying opportunity.

As we await official numbers, one would have to assume that the numbers that came out during the previous session that were so bullish will probably be backed up, but even if they are not, there is a structural problem with crude oil right now, mainly that ESG mandates and the coronavirus lockdown have both caused a very serious lack of production during the previous year, and now that the world has reopened, the reality is that there is a serious lack of supply. As long as the world does not lock itself back down, it is almost impossible for me to see that this market would fall any significant amount of time. Because of this, I think what we have here is a scenario that is almost perfect, in the sense that you just look for value and you take advantage of it. Perhaps we have seen that happen admit day on Thursday?

WTI 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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