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WTI Crude Oil Forecast: Tests the 50-Day EMA – 12 October 2022

While supply issues are most certainly a major problem, the reality is that if there is no demand, it doesn’t matter.

The West Texas Intermediate Crude Oil market has fallen a bit during the trading session on Tuesday to test the 50-Day EMA.Ultimately, this is a market that I think continues to see a lot of noisy behavior going forward, as oil markets are going to be paying close attention to the overall global economy.After all, the market has a high correlation to growth, as crude oil is the lifeblood of the global economy itself.


Now that we find ourselves stuck between the 50-Day EMA and the 200-Day EMA, it does make a certain amount of sense that the market is getting ready to squeeze for a bigger move. The question of course is that the market is trying to answer is whether there will be global growth and whether the 2 million barrel per day production cut coming out of OPEC is going to truly hold pricing higher. While supply issues are most certainly a major problem, the reality is that if there is no demand, it doesn’t matter.

If we break down below the 50-Day EMA, then it’s likely that the $85 level will be targeted. The $85 level is a large, round, psychologically significant figure, and an area where we have seen a bit of flipping from time to time. If we break down below that level, then I think it’s likely that we will continue to see there is pressure and an attempt to break down too much lower levels. That’s probably asking a lot, but at the end of the day, anything is possible.

On the other hand, if we do break above the 200-Day EMA, that will probably bring a lot of algorithms into the market, perhaps sending more money into the marketplace to push the oil markets up to the $100 level. I suspect that breaking out of this down-trending channel is the first of many attempts to go higher. It’ll be interesting to see how this plays out, but right now I think we are during making a big move. With this being the case, I suspect that we should be cautious with their position size unless we take off to the upside. Ultimately, this is a situation where caution is the better part of valor.

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