To call it a withdrawal is probably a bit of an stretch, but Russian troops have pulled back a bit from the Ukrainian border, at least in limited numbers. Vladimir Putin has suggested that he was a little bit more optimistic about a diplomatic end to the crisis on the border, so oil markets sold off just a bit. That being said, it should be noted that the selloff was rather quick, but it was more or less the “panic bid” that we were trying to unwind.
The $90 level looks as if it is trying to hold the market up, and that does make sense considering that it is a large, round, psychologically significant figure. Even if it does not hold up the market, I think that it is only a matter of time before you can be a buyer. I am simply waiting to see some type of stability or bounce to take advantage of, as it gives us an opportunity to take advantage of what is a very large uptrend. We may even have to go sideways for a while, but it is likely to be a situation where we need to work off some of the froth from the blast higher anyway.
The demand situation still remains intact, so I do think the buyers will continue to come back into this market every time they get the opportunity. After all, we are in the midst of the “reopening trade”, showing markets around the world demanding much more energy as we are trying to get back to normal. Whether or not that will continue is completely up for debate, but in the short term it certainly looks likely.
If we do break down below the $90 level, then the $87.50 level would be the next area that will be looking to pick up crude oil. Underneath, you have the $85 level where I would anticipate a ton of support not only based upon a round midcentury figure, but the fact that it was a previous high and we have the 50 day EMA sitting in that same general vicinity. With this, I still believe this is more of a “buy on the dips” situation. This does not mean that we need to go straight up in the air, just that it is almost impossible to short this market.
