The WTI Crude Oil market fell during the session on Thursday, poking below the $105 level, and bouncing off of the $104 level. This of course shows a significant support at the area that we needed to see significant support at, and as a result I feel that this market is well supported at $104, and that we could see a bit of a bounce from here.
Currently, the market looks like its grinding sideways, and possibly taking a breather after a relatively parabolic move, which is often the case when the buyers are trying to collect their thoughts and eventually move higher. The $110 level above of course will be massive resistance, and I feel that this market may not be able to get above there unless of course the Federal Reserve continues with its quantitative easing program, and perhaps even if it shows signs of expanding it.
The Federal Reserve controls the oil markets
Right now, I believe that a main driver of oil prices in general is the fact that the Federal Reserve may or may not taper off of quantitative easing in the month of September. This of course affects the value of the US dollar, and as a result certainly drives the value of oil in an inverse correlation.
The headlines of course will move the markets around drastically, so be aware of the fact that the market can reverse at the drop of a hat. Simply a few choice words out of the Federal Reserve Gov. could have this market fall or rise one dollar in the blink of an eye. The markets of course are a little less liquid as usual, considering that we are in the dead of summer in North America and Europe. That being the case a lot of the larger traders are away on vacation, and as a result we probably won't have any "true" moves until most of the giveback, probably the end of August if not the beginning of September. On top of that, people will be waiting to see what the Federal Reserve does, so expect plenty of choppiness and general insanity.