- The West Texas Intermediate Crude Oil market initially rally during the trading session on Thursday but has pulled back from just below the 50-Day EMA.
- It’s probably worth noting that the demand for global crude oil may be falling due to a slowing economy, and that is foremost on traders’ minds.
- Because of this, I would anticipate a bit of shaky behavior, but ultimately the question now is going to become what is going on in the jobs market.
The shape of the candle certainly won’t do much to help the overall attitude of the market in general, as we have seen a lot of hesitation previously. The fact that we turned around to show signs of exhaustion again suggests that we could revisit the lows. This will be especially true if the jobs number is particularly weak because if there are fewer jobs there will more likely than not be less demand for crude oil. The potential double bottom that we had formed before looks threatened, so if we were to break down below the hammer from the Monday session, it probably will open the floodgates for lower pricing, perhaps sending this market down to the $72.50 level.
Volatility Remains High
Ultimately, this is a situation where volatility will remain high, so you do need to be very cautious about your position sizing, especially since the fundamental situation with crude oil continues to be very erratic, to say the least. While we do have a serious concern about the potential demand destruction that is out there since we have seen so much in the way of negative economic momentum. On the other hand, if the jobs number is particularly high, then people will have to worry about the Federal Reserve tightening too much and driving down demand as well.
Because of this, I think you continue to see a line of noisy behavior, and I think it’s probably easier for this market to fall than it is to rise. It’s also worth noting that the US dollar could have an influence as well, as the market is priced in those US dollars. Ultimately, expect a lot of volatility and it’ll be interesting to see how the jobs report moves the market over the next couple of days.
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