The West Texas Intermediate Crude Oil market broke significantly higher on Tuesday to slam through the $100 level. The $100 level is a large, round, psychologically significant figure that a lot of people will be paying attention to, and it is obvious based upon the way the market reacted once we pierced that level as to how many stops were placed there. The market shot up to the $107 level before pulling back a bit. Nonetheless, this is a market that probably has quite a bit further to go, because the demand for crude oil will continue to strengthen after the reopening of the world’s economy.
The $100 level should now be rather important, as it was so important on the way up. I look at that as the next major support level that will come into the picture, and I am somewhat skeptical of the market breaking back down through there. The market will continue to be very volatile, but at this point, I just do not see an argument for any move lower. After all, pullbacks will more than likely be met with “FOMO”, as a lot of traders will have missed their opportunity.
The supply of crude oil is still very stretched, as there was a year when production was crippled by the pandemic. Because of this, a serious supply chain issue has erupted on the market, because there is so much catching up to do. Beyond that, the market participants will see this market as one that has the best chance of going higher as we not only have the supply chain issues after the pandemic, but we also have concerns about whether or not Russian oil will hit the market due to sanctions. While the oil itself has not been sanctioned, it is clear that with Russia at war there is probably going to be some type of concern with that. The size of the candlestick is rather impressive, but the market simply cannot be chased up at these levels. There should be plenty of opportunities to buy the market at lower levels, so I'm simply going to sit back and wait for signs of support on short-term charts to continue nibbling at the market on the way up. I have no scenario in which I am a seller currently.
