The WTI Crude Oil markets fell hard on Wednesday, testing the $101 level for support. While the level did hold, it seems to be threatened significantly, and I feel that this market is probably going to continue to fall a bit. After all, part of the bullishness was due to the Russian invasion of the Crimean peninsula, and now that the crisis is looking to be less and less hostile, or at least the likelihood of war seems to be going lower, the price of oil is going lower. Remember, the Russians export quite a bit of oil, so any embargo on Russian exports would have tightened the market supply, thereby driving the price higher.
The markets have quite a bit of support at the $100 level, and as a result I don’t think this market can go much lower than that without some kind of major event. At this point in time, it seems very unlikely.
Non-farm could matter
This Friday features the non-farm numbers, which could of course have an effect on this market. The demand for oil would be impacted by the amount of employment, and by extension – manufacturing. Because of this, look for fairly quiet markets in the meantime, and I would be hesitant to be involved. However, the support below is based upon a little more long-term action, so I think the only possible trade at this point would be a potential long set up if we get a supportive candle near the big figure.
The $100 area forming a massive supportive candle would have me very bullish on the oil markets, but I recognize that the road higher would more than likely be a choppy affair. In the end, I think that the market will head back to the upside, and longer-term to the $110 level. This area has mattered in the past, and the market will try to find its way back to it. The selling of oil isn’t a thought until we get well below the $98 handle, something that doesn’t look likely at this point in time.
