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Abstract:The West Texas Intermediate Crude Oil market rallied significantly on Wednesday to recapture almost all of the losses from the previous session. This is a very strong sign, and there is no reason to think that the upward pressure will not continue over the longer term. This is not to say that we will go straight up in the air, simply that the trend is very strong in this market, and that more than likely will continue to be the way forward.
The West Texas Intermediate Crude Oil market rallied significantly on Wednesday to recapture almost all of the losses from the previous session. This is a very strong sign, and there is no reason to think that the upward pressure will not continue over the longer term. This is not to say that we will go straight up in the air, simply that the trend is very strong in this market, and that more than likely will continue to be the way forward.
I believe at this point the $90 level will continue to be somewhat supportive, while the $85 level is even more so. The 50 day EMA is reaching towards the $85 level, so that will make that even more interesting if we were to pull back to that level. Furthermore, it was the previous high that we broke through to kick off this latest leg. That being said, I do not anticipate that we are going to get anywhere near the $85 level anytime soon.
As the world continues to try to reopen, it is very likely that crude oil will continue to see a lot of demand. OPEC continues to struggle with filling quotas, so I think this is a bit of a “perfect storm” for crude oil at the moment. Whether or not this lasts for a long time is a completely different question, but with inflation coming, a lot of times traders will jump into crude oil in order to fight that very problem.
To the upside, I see the $95 level as a bit of a psychological barrier, but I do not believe that it will be a major issue. Once we break through there, it is very likely that the market will go looking towards the $100 level given half a chance. That will attract a lot of attention, so I would anticipate a significant amount of profit-taking in that general vicinity. Ultimately, this is a market that I think has quite a way to go, especially considering that we are heading into the warmer weather in the northern hemisphere, which almost always means that there will be more demand pulled forward as well. With that in mind, I am a buyer of dips.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.