Crude oil markets continue to rally during the day on Thursday, showing signs of life yet again. We did pull back later in the day but I think there is significant support underneath.
The WTI Crude Oil market continues to show signs of support, and I think that the recent gap higher at the beginning of the week continues to show signs of strength yet again. I think that the market is overall trying to consolidate, but with an eye to the upside. The move to the upside won’t necessarily be easy, but I do think that we are going to eventually go reaching towards the $73 level above. If we can break above that level, the market could continue to go even higher, perhaps the $75 level.
I think pullbacks offer value, and as long as we can stay above the $71 level it’s likely that we will in fact continue to find buyers in this market. Overall, I think that we are looking at a situation that should continue to be a “buy on the dips” scenario, but there is obviously going to be a lot of volatility. There are concerns about a tightening crude oil supply due to the fresh Iranian sanctions coming. That takes a significant amount of crude oil off-line, and that can only drive the market higher. We have seen the pull back during the day based mainly upon US dollar strength I believe, and therefore I think it is short-term at best. I have no interest in shorting this market until we break well below the $70 level, something that I don’t see happening at this point. Longer-term, I believe that $75 is probably the significant target that people will be aiming for.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.