The West Texas Intermediate Crude Oil market has fallen during the session on Tuesday as we continue to see the 200-Day EMA and the 50-Day EMA both offer resistance. In fact, we had gotten rather close to forming a so-called “death cross”, when the Monday session shot higher. The market is likely to continue seeing a lot of money, and the fact that we have the employment numbers coming out on Friday does suggest the fact that we are going to see a lot of volatility late in this week.
Underneath, the $86.50 level is an area where we can see a lot of support. That’s an area that should continue to be important, so if we were to break down through the air, the market is likely to continue to drop. In that scenario, I see the oil market dropping down to the $80 level. This would be a very negative turn of events and would probably coincide with quite a bit of “risk off behavior” in various markets, not just this one.
Markets are Concerned About Supply
- A lot of traders are starting to worry about whether OPEC is going to cut production, but at the same time, we must wonder whether the Iranians will eventually be able to supply the market with more crude oil.
- Beyond that, we also must look at the possibility that the global slowdown will destroy demand.
- If that’s going to be the case, then it’s likely that we will see oil get hammered.
On the other hand, if we were to break above the $100 level, it’s likely that the market could go higher, perhaps reaching the $110 level. At this point, it seems like there are a lot of questions about where we are going next, and therefore I think we will continue to see a lot of back and forth in choppy behavior. The oil market is one of my least favorite markets and trade right now, perhaps second only to the natural gas markets, which of course have been absolutely ridiculous. I think we might get a little bit of follow-through in one direction or another after the jobs figure comes out, but between now and then I’m not expecting much.
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