The West Texas Intermediate Crude Oil market pulled back a bit on Friday but found buyers to come in and pick the market up. That being said, the market has shown itself to be somewhat buoyant as there are plenty of buyers on these dips, so I think you need to respect that. The crude oil markets have plenty of reasons to go higher over the longer term, not the least of which will be the fact that almost nothing was done to increase production during the entire pandemic.
Countries around the world are all opening up at the same time, which is going to put a massive strain on the energy markets. This is what we are seeing in the oil market right now, a simple imbalance of supply and demand. In order to quench that, quite a bit of an increase in supply will be needed. Probably more than what we will see anytime soon. Looking at the candlestick, it looks as if we are forming a hammer, which is a good sign, but if we can break above the top of this hammer then we will test the highs of the Thursday candlestick. Breaking that opens up $120, followed by the $130 level.
If we turn around and break down below the bottom of the candlestick for the session on Friday, then it is possible that we could go looking towards the 50-day EMA underneath, which is an indicator that a lot of people pay attention to and has been historically important more than once. The uptrend line that sits just below there also offers support, so it looks as if the market will be very noisy and supported no matter what happens. It is really not until we break down below the $100 level that you can even consider that the uptrend might be done. Because of this, it is very likely that we will eventually hit the all-time highs again, and perhaps even break above there. A lot of analysts seem to believe that we are going to see much higher pricing. Anticipate a lot of noise, but that noise should almost always push you more towards the upside than down.
