The West Intermediate Crude Oil market did very little on Wednesday as we continue to see the market shows very little in the way of momentum. I think this is going to continue to be a major issue, as the oil markets are essentially doing nothing. Oil has to worry about multiple issues at the same time, but it’s worth noting that the OVX has shown that there is almost no real momentum in one direction or the other, so it means that we are more likely than not going to see oil remain relatively steady.
At this point, I would pay special attention to the 50-day EMA, which is sitting at the $105 level. It’s also rising, so that doesn’t suggest the buyers will continue to be aggressive. You should also keep in mind that the demand for crude oil is going to continue to be a question that markets will pay close attention to, due to the fact that there is the possibility of a lack of demand as the global economy is struggling. On the other hand, there are a lot of concerns when it comes to the inflation situation, so it’s possible that oil will continue to be a way to play the trade. There are also concerns when it comes to supply as well.
Just above, the $115 level is a barrier that if we can break above, it’s likely that we would go looking to the $125 level after that. Short-term pullbacks will continue to offer value that a lot of people will take advantage of. In fact, it’s not until we break down below the $100 level that I think you would see a structural change. At that point, we would probably see a drop to the 200-day EMA down at the $90 level.
We are in a strong uptrend, and that should continue to be the case, but that does not necessarily mean that we have a lot in the way of momentum. Because of this, you need to be very patient with any positions that you have, but given enough time looks like the buyers will continue to show interest, so you have to go with where the big money seems to be willing to jump in.
