WTI Crude Oil should begin tomorrow’s trading with red warning signs flashing as a reminder for day traders looking to pursue the commodity. Friday’s price finished near 56.655, which was a vast distance away from its high earlier in the day which touched the 58.730 vicinity.
However, the absence of large trading volume was likely the reason for WTI Crude Oil’s ability to begin climbing higher on Tuesday and into Wednesday. Holiday session trading on Wednesday and Friday certainly factored into the commodities highs and then sudden fall back to reality.
Traders should not have been fooled into thinking a sudden behavioral sentiment shift had taken place in WTI Crude Oil last week. Perhaps there are large buyers lurking in the mist who intend on driving the price of oil back into higher known realms that are closer to 58.000 to 60.000 USD. However, for the moment WTI Crude Oil sank back into its lower realm with ease on Friday as demand for the commodity disappeared in a hurry.
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New Year’s Trading and More Speculative Pricing
Day traders can certainly wager on WTI Crude Oil this coming week, but should understand that conditions will remain trickly. Light volumes could lead to sudden bursts of volatility and values that do not correlate with actual market dynamics via outlooks. In other words, what you see in the coming days may be able to be traded, but prices could vaporize quickly, and it can happen in both directions.
While the price of WTI Crude Oil seems as if it will likely remain under duress and challenge its lower realms, last week’s chart shows that if buyers outnumber other folks who believe a lower price is justified, imbalances can cause sudden moves up followed by reversals lower. And it also should be contemplated that this type of price action may be part of a game being played by a few large players simply taking advantage of thinly traded WTI Crude Oil. Meaning they are moving the market higher with strong buying, allowing others to get exited by the slight bull run, and then sell to cash in profits.
Lower Realm and Equilibrium
The ability of WTI Crude Oil to return to its lower price orbit this past Friday shouldn’t have been a surprise.
- Supply and demand in oil has not changed, nor does it appear to have much impetus coming that should make day traders believe a sudden change in equilibrium is going to be demonstrated.
- Trading this week will continue to be light with New Year’s day approaching.
- Speculators who choose to trade need to be careful.
WTI Crude Oil Weekly Outlook:
Speculative price range for WTI Crude Oil is 55.200 to 58.600
There are several days ahead in which commodity traders will have to deal with thin holiday markets. Certainly this week will be dangerous regarding light volumes which opens the door to manipulations in the WTI Crude Oil like were seen last week. Even trading after the New Year’s holiday is likely to be light into the 6th and 7th of the following week.
Traders who believe WTI Crude Oil is undervalued cannot be blamed given its historical price tendencies, but for the moment oil is flowing from a number of proven and reliable sources around the world and there doesn’t seem like this is going to change over the mid-term. Prices under 58.000 USD may look cheap, but technical traders should look at long-term charts and understand there have been instances when WTI Crude Oil has faced lower value realms before. With low volumes once again in the immediate future for WTI Crude Oil, day traders should be cautious before making bets in the coming days.
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