The WTI Crude Oil market initially fell during the session on Monday, but as you can see, traders came back into support the market. This followed an almost lockstep with what the US Dollar Index did during the session, as the US dollar initially appreciated, but fell back down in order to form a shooting star. This shows just how highly correlated the US dollar and the value of crude oil can be at times, and reaffirms to me that this market is mainly being driven by the value of the Dollar in the short term.
Overall, this is a very sloppy market from what I see, but it does make sense that we get a bit of a bounce down towards the $92.50 level. After all, I've been saying for a while that I thought $92.00 level was significant support. In the end though, I cannot say that I actually like this market. In fact, I think it's essentially being driven by algorithmic trading at the moment.
Where the machines go, pain follows.
As a general rule, I have noticed that when the algorithms take over, it's generally a lot of choppiness that wipes out the retail trader. Because of this, I am not overly enthused about this market right now, and I believe that a lot of the larger traders are simply away from their desks. There are such things as "junior traders", and they essentially man the machines while the real traders are away. They don't necessarily take on a new positions as a general rule, rather they tend to manage longer-term positions, or just keep an eye on the shop to make sure we don't lose tons of money while on vacation.
I believe that they are mainly who is involved at the moment. After all, the demand for crude oil isn't exactly strong at this point. I also have noticed how OPEC is suspiciously quiet at the moment. You would think that they would have something to say about prices of oil being near the $100.00 level, when there's absolutely no way to justify that price from a demand perspective. Because of this, I feel that although the next dollar or two will more than likely be to the upside, it's going to be a very difficult market to trade.
