The West Texas Intermediate Crude Oil market has been relatively stagnant during Friday's trading session, as traders try to figure out the future of the economy. Although OPEC announced a 1.6 million barrel cut a couple of weeks ago, the demand for oil is a significant concern, given the possibility of a major recession. The supply situation may be tight, but a recession could work against the value of oil, creating a conundrum.
The gap below the WTI Crude Oil market is likely to get filled over time, and a significant breakdown could present an opportunity for traders to sell into that gap. However, such a trade should be approached with caution as the market is relatively volatile. If supply remains constrained, oil could take off, but it needs to break above the highs of the last couple of days to challenge the $85 level in the WTI grade.
The Brent market is just below the 200-Day EMA, which presents some technical resistance for traders. The market will ultimately depend on the demand for oil, with the $90 level just above acting as resistance. Brent needs to break out of this resistance level, and traders should pay close attention to the WTI grade, which could provide a heads-up on whether Brent will be able to do so.
Pay Attention to the Technical Resistance and Support Levels in Both Markets
- Like the WTI grade, Brent also has a gap underneath, which may be filled over time.
- It is possible that futures traders will try to fill that gap, which presents an opportunity for traders to sell into it.
- The $80 level is likely to serve as a floor for the market unless there is a significant shock to global growth.
At the end of the day, the WTI Crude Oil market and Brent market were relatively stagnant during Friday's trading session, with traders trying to figure out the future of the economy. Demand for oil is a significant concern, given the possibility of a major recession, and the supply situation may not be enough to support oil prices. Traders need to exercise caution and pay attention to the technical resistance and support levels in both markets. The gaps underneath both markets may be filled over time, presenting opportunities for traders to sell into them. The $80 level is likely to serve as a floor for both markets, but a shock to global growth could change this.
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