- The West Texas Intermediate Crude Oil market plunged during the Friday session, piercing the $80 level quite handily.
- At this point, the market looks as if it is trying to break down to a fresh, new level, but we also did bounce a bit later in the day.
- That suggests that perhaps people were willing to take profit into the weekend, and I must wonder whether or not if this happened in the middle of the week, whether or not there would be a bigger move to the downside.
Breaking down below the bottom of the candlestick for the trading session on Friday could open fresh selling, perhaps in in this market down to the $75 level. On the other hand, if we bounce here it’s likely that we could test the $80 level initially, and then perhaps the $85 level. $85 level was a support level and short-term returns, and I would be looking for signs of exhaustion to start selling again. After all, this is the market that continues to look at the world through the prism of whether there is going to be any global growth.
Global Growth Hinders Oil Demand
Global growth of course is starting to drift lower, therefore you would imagine that there will be a lot less demand for crude oil. Granted, OPEC has cut 2 million barrels per day recently, but it appears that the market is not worried about that. I do believe that every time we rally now, then we could get a lot of selling pressure as traders are looking at the market as offering value in shorting. Because of this, the market will continue to see a lot of back-and-forth on any given day, and I think it’s a situation where that volatility should continue to offer plenty of shorting opportunities because quite frankly traders do not like volatile markets.
Furthermore, as we continue to see a lot of concern around the world, it’s likely that we will continue to see oil fall out of favor, right along with other forms of energy as the demand is about to plummet in the global recession that is almost certainly coming. On the other hand, if we turn around this could have just been the bottom based upon the “double bottom.”
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