- The West Texas Intermediate Crude Oil market has fallen during trading on Thursday, as more concerns about demand enter the marketplace.
- At this point, it looks as if the crude oil market is starting to show just how concerned traders are around the world with global growth, because quite frankly, without global growth you do not have one of the vital parts of the global oil situation, demand for the product.
Yes, OPEC has recently cut 2 million barrels of production per day, but they have also downgraded their demand forecasts going forward, and if there are concerns about the global economy, one would have to think that one of the first places it will show up is the gold market. With GDP seemingly stagnant in huge parts of the planet, the demand will continue to fall. Beyond that, inflation causes major issues as well, so as the economy falls the way it has, less people are looking to buy goods, which means less energy will be needed for those goods. As a sign of the potential trouble out there, CH Robinson, a logistics and supply chain management firm in the United States has recently began laying off people, meaning that there seems to be less demand for “stuff.” (“Laying off” is the same thing as “sacking” in other parts of the English-speaking world.)
Noise Likely to Take Over the Market
To the upside, oil certainly has a lot of resistance in the form of the 50-Day EMA, and the $90 level which has the 200-J EMA sitting just above it. Because of this, I think it’s very likely that we continue to see downward pressure on rallies. I also recognize that the $80 level should be supported as well, so if we were to break down below there it would possibly kick off the next leg lower. In that scenario, I could see this market dropping down to $75 rather quickly.
Regardless, I think you probably have a very noisy market ahead, because quite frankly that’s what we see everywhere. Oil is a major indicator of economic growth or loss and will continue to cause it to be in the sites of most traders around the world. A strengthening US dollar, something that we had seen start to come back into the picture on Thursday, could also cause some issues as well.
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