Light Sweet Crude Oil
- The Light Sweet Crude Oil market has been a bit positive for the month of January, but quite frankly we have been bouncing from a very oversold position. Because of this, I don't read too much into the positivity other than we had tested a major support level in the form of $55 recently and have recovered.
Supply and Demand
There are a lot of questions right now about supply and demand because quite frankly there is more than enough supply out there to satiate any demand by the market. That being said, there are also questions asked about geopolitical uncertainty as the United States continues to bring more assets into the Middle East. Some traders are starting to question whether or not America will launch another attack on the Iranian regime.
Whether or not that's the case, it probably would be a short-lived rally based on any headline due to the fact that we have already seen the Americans and Israelis attack Iran, and one thing to notice is that they never attack the oil facilities. That tells you their intention right away and quite frankly it does make the idea that they would suddenly change their mind and start to hit the oil production infrastructure very unlikely.
Range Bound Market Dynamics
With that being the case, I think we remain somewhat range-bound, but I do think there is a bit of a floor in this market at the moment due perhaps to the fact that there has been so much major support at the $55 level multiple times in the past.
Top Regulated Brokers
I think you have a scenario where traders will have to come to terms with whether or not this actually ends up being a floor. If it does, then we should see plenty of buying action in this general vicinity. If it does not, then crude oil could rapidly unwind, but at this point, I think you have a bit of balance that a lot of people will be watching as a good sign that we are somewhere near fair value. Expect to see this market oscillate between $55 on the bottom and $65 on the top.
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