The crude oil market has been rangebound for the month of February but seems to be “perking up” as we leave February.
Crude Oil
The crude oil market has been very choppy during the month of February as there are a lot of moving pieces at the same time. We've been bouncing around between the $62 level at the bottom and the $66.50 level at the top, and of course, we have a lot of different things going on at the same time. First of all, we have just bounced from a major support level in the form of $55, but we are also starting to get fairly close to spring in the Northern Hemisphere, which means that we will more likely than not to see more demand from drivers.
Driving season drives up demand for petroleum and it transfers itself into the price of the chart for crude oil. Furthermore, we also have questions about whether or not the US is going to be attacking the Iranians. If the US does in fact attack the Iranians, it could cause a bit of a spike in the oil markets, but that is something that probably gets sold into relatively quick if the market gets wind of the fact that the oil infrastructure is still in place. We've seen that previously during the month of June.
Seasonal Demand and Future Pricing
I do think that overall, we have more of a tilt to the upside right now, but I don't want to trade based on an attack. I would rather buy based on value on short-term pullbacks. As we head into summer, there will be even more demand, and if you look at the longer-term chart, you can make an argument for oil being much more comfortable around $70 a barrel than it is $62 a barrel. If we were to break down below $62 a barrel, then I think you've got a situation where the $55 level could get targeted again, but that would probably take pretty poor economic numbers around the world to make that happen.