The West Texas Intermediate Crude Oil market initially dipped on Tuesday but has found support yet again like we did on Monday. At this point, the market is trying to figure out whether or not it can build up enough momentum to go higher, as this is a market that has a lot of demand tied to it. Furthermore, OPEC+ happens to be struggling to build enough momentum to produce as much oil as the agreements suggested.
As we have the world economies reopening, it does make sense that we would see crude oil continue to go higher due to the fact that it is a major influence on where we go longer term. As demand picks up then obviously price will go right along with it, but it is worth noting that the markets will probably be volatile as we are not quite clear on where risk appetite is going to be. Yes, crude oil is a bullish market longer term as well, so it does make sense that we would see this continue to find plenty of momentum chasers and buyers due to the fact that it is about the only thing that has been working as of late. As stock markets melted down, the crude oil market barely paid attention.
When we look at the chart, you can see that the $85 level has caught a lot of attention, so it will be interesting to see whether or not there are still plenty of defenders in this area. I think now that we have the FOMC statement and press conference coming out on Wednesday, we could get a lot of volatility in the US dollar, which will be felt in this market as well. The market will continue to see a lot of debt buying, but as we are going through the press conference you could find yourself in a little bit of trouble. Keep your position size reasonable, but clearly there is only one direction that you can be trading at the moment as crude oil has proven itself to be willing to hang on regardless of what is going on in other markets. To the upside, I believe that the $90 level will more than likely be targeted sooner rather than later.
