The WTI markets had a positive session for Monday, predicated mainly upon the fall of the US dollar overall. In a truly ironic turn of events, the PMI numbers coming out of United States and the contractionary mode, albeit just slightly, pushed the value of commodities on the whole higher. This was because of that people believe that there will be more demand for crude oil, rather that the US dollar lost a lot of value.
The main reason for the loss of value in the US dollar is simply that people to leave the Federal Reserve is a lot less likely to cut back on quantitative easing anytime soon because of those poor numbers. However, before you try to make some type of long-term thesis based upon that, you have to keep in mind that the nonfarm payroll numbers, this Friday. And although it isn't necessarily and oil related event, nonfarm payroll numbers have a great influence on risk assets in general and therefore oil as well.
$94.00 still is crucial
Within this chart, I believe that the $94.00 level is still crucial as it is a significant amount of resistance. This is a short-term resistance area obviously, but if we can get above that the market should reach towards the $95.50 handle with relative ease. The biggest caveat to this of course is the fact that it is a nonfarm payroll Friday coming up, and therefore we could have fairly quiet markets as we approach that important announcement.
Without a doubt, that announcement will drive where the markets in general go over the next couple of weeks. You could see a complete repricing of the US dollar if that number is fairly strong. After all, one of the biggest concerns that the Federal Reserve has at the moment is the employment situation. We certainly will not be able to pull back from quantitative easing if the employment numbers are still relatively week. While I do not anticipate any change in Fed policy soon, the markets of course are trying to read the tea leaves as it were.
