- The oil markets have been under significant pressure, with the West Texas Intermediate (WTI) and Brent markets both showing signs of negativity.
- During the trading session on Thursday, the WTI market appeared heavy, reflecting the idea of a major slowdown.
- The market is currently priced for this scenario, and the gap that formed from OPEC cutting 1.6 million barrels per day from production has now been filled and broken.
- This is a generally negative sign, and there is a high likelihood that the WTI market could drop to the $70 level. However, this may not happen immediately.
Any rallies in the WTI market should expect significant resistance at the 50-Day EMA, which was broken through during the previous session. As a result, there is no interest in purchasing oil anytime soon, and it is likely that the market has entered a short-term market where rallies should be faded going forward. This is because the global economy is showing signs of slowing down.
The Brent market has also been experiencing similar pressure, although it attempted to rally more than the WTI market did earlier. However, sellers have returned, and it appears that Brent will reach the $75 level, which has significant psychology attached to it and has offered support in the past. Breaking down below this level opens up the possibility of a move down to the $72.50 level and eventually the $70 level if things get bad enough.
There Will be Plenty of Opportunities in the Future
The 50-Day EMA above Brent is starting to break down below the $82 level, providing significant resistance. As a result, rallies between the current level and $82 that show even the slightest potential for banking gains will probably end up being short-term selling opportunities. It is not advisable to risk too much on any type of position, and it is not recommended to purchase oil in a slowing global economy. If one is patient enough to wait for oil to become "a bit too expensive," it is likely that there will be plenty of opportunities in the future.
In conclusion, both the WTI and Brent markets have been under significant pressure, showing signs of negativity due to the global economy's slowing down. Any rallies in these markets should expect significant resistance, and it is not advisable to purchase oil anytime soon. It is recommended to wait for oil to become "a bit too expensive" to get the best opportunities in the future.
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