The West Texas Intermediate Crude Oil market initially pulled back a bit during the trading session on Tuesday but found buyers once again in order to grind the upside. Given enough time, I believe it is likely that we are going to try to reach towards the $49 level above, an area where we had seen a lot of selling pressure. At this point, there should be plenty of resistance in that area, extending all the way to the $50 level. Ultimately, the $50 level being broken to the upside would be a very bullish sign, perhaps unleashing market forces to go much higher. That being said, I do not necessarily know that we can do that anytime soon.
The candlestick is a bit of a hammer, and it does suggest that we are going to continue to see the short term “buy on the dips” type of situation. The 200 day EMA currently sits just below that candlestick, so that could be an area and a technical indicator that people will be paying close attention to. Below the 200 day EMA we have the 50 day EMA near the $39.71 level, so I think there is a huge “zone of support.
The US dollar falling has been a major driver of oil markets rallying, and the commodity markets are reacting in-kind. People are trying to get away from greenbacks in order to hang on. You can preserve wealth by owning “things”, and that is exactly what we have been seeing. Granted, the production cuts by OPEC have been helping as well, as for once multiple countries have actually stuck to the program. That does drive down the amount of supply, but one of the biggest concerns that is keeping the market somewhat sluggish is the fact that a lot of economies out there are basically shut down or close to it, and that drives down demand. We are starting to see more air traffic out there, which does help but ultimately, we can only go so far on that alone. We need to see economies open up to see the West Texas Intermediate Crude Oil market take off to the upside. I think we are going to slowly grind to the upside, reaching towards the $49 level. As far as selling is concerned, I do not want to do to so until we get a negative candlestick that wipes out the 50 day EMA.