WTI Crude Oil Forecast: Gets Slammed
The market will continue to be very noisy, but as you can see on the ATR, volatility has been dropping and the ranges have been shrinking overall as we continue to drift lower.
The West Texas Intermediate Crude Oil market has slammed lower during the trading session, losing almost 5%. At this point, the $85 level is being threatened, and if we can break down below it, it’s likely that we could go down to the $80 level. There are a lot of concerns out there when it comes to demand, and that continues to be the one thing that people pay the most attention to.
Furthermore, we also have the US dollar strengthening quite drastically, which has a lot of people looking at the market through the prism of fewer US dollars being necessary to buy a barrel of oil. Beyond that, we also must understand that even though OPEC did a small cut of 100,000 barrels a day recently, it has not helped the market.We have also retested the previous support level and ended up finding resistance. The size of the candlestick certainly shows there is a lot of negativities out there, and now it looks like a little follow-through is more likely than not.
If we were to break down below the $80 level, things could be interesting as the Americans have stepped out and said that they were going to jump into the market and start “refilling” the Strategic Petroleum Reserve once we reach that level.It’s a brilliant move because the Americans filled most of the SPR with $12 oil.Having said that, it’s always cheaper to buy votes with somebody else’s money instead of your own.
I don’t know if that puts a floor in this market. We will have to wait and see how the $80 level turns out because there are not enough people out there using oil right now to get excited about it, and if the US dollar continues to strengthen, that of course must be shown on this chart as well. In general, this is a market that I think you fade rallies, at least for the foreseeable future. The market will continue to be very noisy, but as you can see on the ATR, volatility has been dropping and the ranges have been shrinking overall as we continue to drift lower. It would take a Herculean effort to turn this market around.
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