- The West Texas Intermediate Crude Oil market initially drifted a bit lower during the trading session on Thursday but has turned around to show signs of life as the US dollar has been smashed.
- This was due to the CPI numbers in the United States coming out in 0.4% month over month, instead of the expected 0.6%.
- The idea is that the Federal Reserve may slow down or even pivot sooner than people thought, so therefore it could bring down the value of the greenback overall. As oil is priced in US dollars, this all ties together quite nicely.
The market still looks at the $85 level underneath as the true support, we should probably continue to think about this as potentially building a bit of a consolidation area. True, we had formed a bit of a “double top” at the 200-Day EMA, but this does not necessarily mean that we are going to rollover forever. It just tells me that the 200-Day EMA is being respected, at least for the time being. If we can break above that, that obviously would be a signal that you would have to pay attention to. At that juncture, I would be looking forward to WTI Crude Oil to go looking toward the $100 level as a potential target. On the other hand, if we were to break down below the $85 level, then it’s possible that we could go down to the $80 level.
Demand Concerns Ahead
At this juncture, I think this is a market that is trying to figure out what its next bigger move. We may have a bit of noise over the next couple of days, but ultimately, I do think that you’ve got a situation where we will eventually break out of this little area. Once we do, then we have a little bit more clarity.
One of the biggest problems you are going to have with the crude oil market is that there is a huge concern when it comes to demand, as the world’s most decidedly slowing down, but at the same time you have problems with supply. Because of this, we will continue to cause a lot of major volatility in this market, therefore I think the most important thing you can do is keep your position size reasonable, but it certainly looks as if we are trying to consolidate and build up enough inertia for the bigger move.
