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.