WTI Crude Oil will begin trading around the 74.165 price early Monday morning. The price of the commodity began last week above the 77.000 USD per barrel mark, and in the previous week the value of WTI flirted with the 79.500 ratio briefly.
Day traders were presented with another lesson in the art of commodity speculation this past week which could prove to be important: Don’t believe all the narrative being spoken.
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Showing that noise from President Trump’s swearing in and the freezing cold weather did not send the price of WTI Crude Oil higher, retail speculators may think the downwards momentum of the commodity was a mistake. It wasn’t. Instead what likely happened is that large speculators who drove the price higher in WTI Crude Oil since the second week of December, when the price was below 68.000, ran out of power.
False Narratives and Fundamentals Collided this Week
For several weeks a narrative that renewed focus on the Russian oil trading ban was a driver on the higher price was heard. Also talk about cold U.S weather convinced some that this was another reason for the higher price in WTI Crude Oil. However, supply and production for WTI Crude Oil has been stable.
The reason the commodity likely went higher was because of some rather large orders in the system coming from big users, but also from speculative buying. The bullish trend likely had to come to an end, and when WTI Crude Oil went above 79.000 USD on the 15th of January this may have proven to be a point in which large traders began to cash in profits.
The Trump Energy Policy and WTI Crude Oil Prices
President Trump during his inauguration address last Monday said, “drill baby, drill”. If there were any mistaking what Trump’s energy policy would be, all doubts were put to rest. The U.S will certainly take on a greater pro-active energy production stance and fundamentally this will help produce headwinds on the price of WTI Crude Oil, or at least it should.
- Traders should expect reversals to be seen higher on occasion.
- There will not be a one way downward trend in WTI Crude Oil from now on.
- However, price equilibrium will certainly be tested again this coming week and it would not be surprising to see the lower elements of WTI Crude Oil which were seen late last week remain in focus.
- The 74.000 USD price level in WTI Crude Oil may prove an interesting barometer if broken lower.
WTI Crude Oil Weekly Outlook:
Speculative price range for WTI Crude Oil is 70.600 to 76.200
The higher prices in WTI Crude Oil may reappear. And it could be surprisingly quick, and that is why risk management is always needed when speculating, particularly in commodities. However, the momentum lower seen last week is likely a sign that speculators who drove the price of the commodity higher the past month knew that their show of power buying was going to run out of additional impetus upwards. If WTI Crude Oil falls below the 74.000 level early this week and sustains prices below, the 73.000 price could be tested rather quickly.
WTI Crude Oil may have some runs higher left, but from a speculative point of view based on U.S energy policy and this change which will certainly filter into sentiment, it seems correct to believe the commodity could trace lower. Speculators should not be overly ambitious with selling positions and be willing to cash out profits. Reversals higher will remain a real threat in WTI Crude Oil, but resistance levels may start to prove durable, trading above the 75.500 level could be a point in which some believe the value has gone too high.
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