The WTI Crude Oil markets had a slightly positive session on Tuesday, as the $94 level continues to be a magnet for price as it had been back during the month of November. The shape of the candle doesn’t say much, but it does look mildly supportive. Below, there should be a significant amount of support at the $93 handle, and therefore I believe that a bounce is probably more likely than not.
All things being equal, a break of the $95 level should send this market to $96, and then possibly $100. However, we have the downtrend still in full effect, although I think a bounce is probably likely considering the market is so oversold. This market should continue to be difficult for the buyers to take control of, but we do have the nonfarm payroll numbers coming that will have a massive effect on this market as well.
Nonfarm payroll numbers.
I believe the nonfarm payroll numbers will continue to be important in this marketplace, as it will dictate what the likelihood of a Federal Reserve tapering outcome would be. I suspect that a strong jobs number could also drive up the value of the WTI Crude Oil markets based upon perceived demand likelihood as well. After all, the more jobs there are, the more likely it is the industry will need more energy.
Going forward, I think that any bounce will be short-term in nature and less of course we have a very strong jobs number. Ultimately, I believe that we will need a couple more months’ worth of good numbers in order for the Federal Reserve to do anything drastic. The recent tightening of monetary policy was minor at best, and as a result the actions were probably a bit overdone. However, I do believe that in the short-term there’s probably some money to be made to the upside, but I would feel better in the options market than the futures market as the volatility could continue to be extreme until the larger players come back into the market, which I would suspect are waiting for those employment numbers.
