Crude Oil Forecast: Oil Markets Continue to Show Volatility – 21 March 2023
Regardless of your position, it’s crucial to keep your position size reasonable due to the highly volatile nature of the oil markets.
The WTI crude oil market has been in a bearish state, with a possibility of a short-term bounce towards the $70 level, and potentially even higher, such as $75. However, there are concerns that a continued tightening of the Federal Reserve could lead to a slower economy, resulting in less demand for oil. Therefore, it’s important to keep an eye out for signs of exhaustion after a bounce, to start selling again.
It’s very likely that there are a lot of headwinds above that could continue to keep WTI on its back foot. If the Federal Reserve does shock the market with its hawkish behavior, it’s very likely that oil will be one of the first places people start shorting as not only do they worry about demand, they will have to worry about the US dollar strengthening.
In contrast, the Brent crude oil market has been falling due to concerns about the demand for oil in a slowing economy. The market is expected to be highly volatile due to the shifting demand in places like Europe and Asia. Furthermore, the $77.50 level above was previous support, so it should provide significant resistance. Therefore, if the market shows signs of exhaustion in that area, it could be an excellent opportunity to sell short. However, if the market breaks down below the $70 level, it could result in a potentially negative move that could send the market down to the $65 level.
Regardless of your position, it’s crucial to keep your position size reasonable due to the highly volatile nature of the oil markets. It’s important to keep an eye on the Federal Reserve meeting on Wednesday, as well as any other news that could impact the market, to make informed decisions. Market memory is also a significant issue, as previous support levels can become significant resistance levels and vice versa. Therefore, it’s important to stay vigilant and adjust your strategies accordingly.
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