The WTI Crude Oil market had a slightly positive session on Tuesday, as we continue to drift just below the $94.00 level. This area is a significant resistance area, on the short term charts. The bigger picture in this market however, is going to be the $92.00 level as being support, and the $97.00 level as being resistance. I feel that this market is trying to use this as its summer range, but quite frankly one has to wonder what the supply and demand situation is truly like in this market.
This market will be very susceptible to headline risks, and this of course is going to be the case going forward. The biggest headline risk at the moment of course is the nonfarm payroll announcement coming out on Friday, and a good number out of the Bureau of Labor Statistics could force oil prices higher, as traders will assume this means that if we are hiring more people in the United States, that there will be more energy demand in the form of office buildings, power plants, and of course commuting.
Choppy conditions prevail
Oil has been a complete mess for a while now. This is why I started focusing more on the one hour chart, simply because there is no real discernible action on the daily chart beyond chopping back and forth. This is because we are entering the slowest time of year, even though it's one of the highest demand periods during the average year. This is mainly because most large traders are either away from their desk already, or getting ready to take off for vacation. The markets tend act very stubbornly during this time period, and as a result holding onto a longer-term trade is probably as close to an impossibility as you will get.
All things being the same, I believe that we will try to push higher in the short term. However, clicking a breakout above $97.00 is very foolish at this point, and in my opinion can only be accomplished under one or two scenarios: Either the headlines out of the Middle East suddenly get very bad, or the nonfarm payroll numbers out of the United States are much higher than anticipated.
