- The West Texas Intermediate Crude Oil market rallied a little bit during the trading session on Monday, but it has shown itself to be a bit feckless as we have given back quite a bit of the initial momentum.
- At this point, the market is probably doing everything it can to do some type of range building exercise, letting us know where we are going to trade for the next month or 2.
- At this point, there are a couple of areas that I’m looking at very closely, as I think this market is apt to find itself in a range sooner or later.
Technical Analysis
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The technical analysis for this market is in a bit of flux right now, due to the fact that we could be trying to form some type of “double bottom”, and quite frankly, before the open outcry part of the session in America, it looked like that’s exactly what we are trying to do. The $62 level is a candidate for support, but we’ll have to wait and see whether or not that actually plays out. The $66 level is very clearly a major resistance barrier, and until something changes, it’s probably going to be somewhat difficult for market participants to drive the Light Sweet Crude Oil market above that level. Furthermore, we also have the 200 Day EMA dropping, and it will eventually find its way down to that area also.
If we were to break down below the $62 level, then it would make a bit of sense to anticipate that the $60 level could end up being support, mainly due to the fact that it is a large, round, psychologically significant figure. Anything below there could be rather ugly.
The biggest problem the crude oil has at the moment is the fact that Russia, OPEC, in the United States are all pumping massive amounts of crude oil into the market. With that being the case, market participants will continue to see a lot of downward pressure on price in general. Because of this, I still believe that even if we do form a bit of a range, it is probably more of the “sell the rips” type of environment. The first signs of exhaustion probably get sellers back into the market.
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