- The crude oil markets have been a bit noisy over the last couple of weeks, but when you zoom out and look at the longer-term charts, they become quite clear.
- At this point, we have recently bounced from a major support level in this market goes back 3 years.
- By doing so, it shows that the market is in fact still alive and still following the same boundaries.
I think that the month of April will probably end up being a little bit more bullish than bearish, but I’m not necessarily looking for explosive moves. This is part of a cyclical trade, when the American demand for crude oil picks up, as it becomes “driving season”, and of course it also looks as if industrial demand could be picking up in multiple countries around the world.
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While the United States might be heading into a small recession, the reality is that the forecast for economic growth going out into the end of the year is still fairly robust. For what it is worth, the GDP numbers that came out on March 27 were stronger than anticipated, so it’s very possible that the United States will end up avoiding a recession. This would be positive for oil.
Ultimately, the area between $65 and $67 continues to be a massive floor in this market. Above, the $72.50 level could be a little bit of resistance, and breaking above that opens up the possibility of a run to the crucial $78.50 level. The $78.50 level is an area that has been very difficult to break in the past, so I don’t think we rally above there without some type of major external pressures. The month of April, I just think we end up higher than we are now, with the occasional pullback offering value that a lot of people will be willing to take advantage of. I have zero interest in trying to short the crude oil market, at least not in the next few weeks.
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