The WTI Crude Oil market rose during the session on Thursday, breaking above the $97.00 level at one point during the day. However, we gave back those gains and now have formed a relatively suspicious looking candle. However having said that, it is of course positive, in this suggests that there is a significant amount of buying pressure. The $99.00 level has previously been significant resistant, and I feel that as long as we can stay underneath there, we are going to remain somewhat range bound.
The summertime has a long history of providing choppy and sideways markets, and this is especially true when it comes to crude oil. Quite frankly, there's absolutely no reason to consider crude oil to be scarce, as the demand simply is not there. That being said, this will more or less reflect what's going on in the US Dollar overall, and as the Dollar strengthens, this contract will weaken. I believe wholeheartedly that eventually we will go back down to test the bottom of the consolidation area, somewhere closer $92.00 or so. That being said, I think that waiting for a resistive candle is certainly going to be the safer way to play this market.
Watch the US Dollar Index as well as the USD/CAD currency pair.
Watching the flow of Dollars in the US Dollar Index will be vital, as when that contract gains in strength, this contract typically weakens. It makes sense, considering that oil is bought in Dollars, and as a result it should take less of them to buy barrels of oil. It's a simple supply and demand equation, but this time you're not looking at how much oil as needed, rather how many Dollars are needed to supply the demand from the sellers.
In order to become bullish or bearish for the longer-term, I will need to see this market break above the most recent high at $99, and at that point time I would be an avid buyer. Until that happens, I cannot help but think we will eventually revisit the $92.00 level, where we should find significant support. In less you are short-term trader, you should probably do yourself a favor and avoid this contract until August.