WTI Crude Oil
The WTI Crude Oil market continues to hang just above the $50 level, showing signs of support at the psychologically important figure. At this point, if we break down below the lows of the week, which is the bottom of the Thursday candle, then the oil market will almost certainly go down to the $45 level, wiping out the massive move higher that had just been crushed. That being said, I think that the market is trying to come to grips with the idea of the Russians talking other oil-producing countries to cut production, which would be very bullish obviously. At that point, the $55 level above is a major resistance barrier, so I think it’s not until we break above there that you get really start to hang on for a longer-term move. However, a short-term bounce is definitely being threatened at this point.
Natural Gas
Natural gas markets have gapped lower for the Friday session, turned around to rally towards the $4.75 level, and then rolled over again to show signs of exhaustion as we formed a shooting star. The market has been bouncing around between the $4.00 level below, and the $5.00 level above for a while now. I think that is essentially the consolidation area that we will be working with, at least until we start to trade warmer weather contracts. As soon as we start focusing on Spring contracts, extensively in about three weeks or so, we will probably grind back and forth. At that point though, we should start to see this market fall and go crashing towards the $4.00 level. Because of this, I much more comfortable shorting rallies on signs of failure than anything else right now. Once we break down below the $4.00 level, we should start to accelerate to the downside.
