The West Texas Intermediate Crude Oil market has pulled back slightly during the trading session on Monday, as we continue to see a lot of hesitation just above at the $80 level. This makes a certain amount of sense, due to the fact that we have seen a lot of reaction to big round figures like that, and of course the fact that the market had been rallying so hard to get here. Because of this, it does make the idea of a pullback a likelihood, simply due to the fact that the $80 level will attract a lot of attention.
Crude oil course continues to be thrown around by the idea of whether or not we are going to have a decent reopening trade and of course the Federal Reserve putting a bit of pressure on risk assets has not helped recently either. Nonetheless, there are concerns about whether or not we will continue to see the output that we have seen as of late. Yes, we are starting to see news coming out of Libya that they are putting more online, but at the end of the day the question is not so much as to whether or not we are going to have enough oil, but is demand going to pick up?
Most people believe that the economy is going to start picking up as the coronavirus seems to be losing some of its fight. Ultimately, this is a market that is highly sensitive to growth, as of course crude oil tends to drive the entire economy. Because of this, I believe it is probably only a matter of time before we would see the buyers come back in and pick this market up, not only due to the fact that we have been trending higher anyway, but we also have plenty of technical influence just below. The most obvious spot is the $77.50 level that had previously been resistance, but it has also been supported by the idea of the 50 day EMA breaking above the $75 level and curling higher. I think at this point in time the crude oil market continues to be a “buy on the dips” type of situation. All things being equal, we very well could end up heading towards the $85 level above, which is where we had formed a double top and then fell from.
