The West Texas Intermediate Crude Oil market has rallied significantly during the trading session on Thursday, as traders are rolling over into the June contract. It’s obvious that the $20 level is offering a significant amount of support, which makes quite a bit of sense considering that it is a large, round, psychologically significant figure, and an area that has shown quite a bit of support recently. For what it’s worth, it should be noted that the Brent market was relatively less bullish.
Looking at this chart, now that we have broken above the $25 level, I think we will find sellers closer to the $29 level above which extends resistance to at least the $30 level. Above there, the next major technical level that we need to pay attention to, is the 50 day EMA near the $33.42 level. Above that, the $35 level also offers a lot of resistance as it is the beginning of a massive gap that has yet to be filled.
I think it could eventually get filled, but we are a long distance from that happening. There isn’t enough demand out there to keep the rally going for any significant amount of time, so I look at this rally as an opportunity to get involved and start selling again, albeit from a higher level. There simply is not enough in the way of demand in the world when there is a massive amount of the economy shut down to keep demand for crude oil rallying. Furthermore, there is so much in the way of oversupply that we are literally getting dangerously close to running out of space for storing crude oil. This is not exactly the scenario in which we should see bullish moves, but if we do just think of them as opportunities to short at better bids.The market has a long way to go before it proves itself to be bullish enough although it does look like the $20 level could offer a bit of a “floor” in the market. If it gives way and we actually close below there is any type of significance, that could lead crude oil too much lower levels, the very initial target be in the $17.50 level. After that, we could be looking at the $15.00 level. Again, at this juncture I don’t have any interest in trying to buy this market.
