WTI Crude Oil
The WTI Crude Oil market fell significantly during the course of the day on Wednesday, as the bearish pressure continues. Quite frankly, I believe that this market does fall given enough time, so therefore I am looking for short-term rallies to fade on signs of exhaustion. I believe that we will try to reach towards the $40 level given enough time because demand simply is not going to be there. IEA estimates that we are going to have continued lack of demand and more importantly oversupply well into next year. I am a seller only, have no interest whatsoever in buying this market. With this being the case, I have to admit that I believe $40 will be significant in the sense that it is a large, round, psychologically significant number.
Natural Gas
The natural gas markets went back and forth in a very volatile session on Wednesday, as we ended up forming a bit of a shooting star. The shooting star of course signifies that there is quite a bit of resistance, and as a result I believe that a break down below the bottom of the candle would be a very bearish sign, probably sending the natural gas markets back down to the $2.65 handle next. I’m not saying that it will be a straight shot lower, just that there is a lot of bearish pressure and it’s the next logical step.
On the other hand, if we can break above the $3 level it is extraordinarily bullish at that point in time I believe we would continue to go much higher, probably as high as the $3.40 level next. The meantime though, I think that demand is going to start dropping, and as a result I am still looking for selling overall. I’m not looking for a meltdown though, what I’m looking for is continued consolidation.
