The West Texas Intermediate Crude Oil market rose during the trading session on Thursday, as we continue to threaten a breakout. The OPEC meeting is currently going on, I think a lot of traders are out there trying to get ahead of the announcement. It’s very likely that OPEC will cut production, but the question will remain as to how much. The market has truly punish crude oil, due to a concern about recession, but if we can continue to see a little bit of momentum from here, we could be threatening the 200-Day EMA rather quickly, which of course is a major technical signal.
Saudi Arabia is pressuring the rest of OPEC to cut, and it appears that they are going to get that wish fulfilled. With that being the case, I suspect that it is probably only a matter of time before markets take off. A break above the 200-Day EMA could unleash and move back toward the $89 level. Short-term pullbacks at this point could reenter the consolidation area, but I think at this juncture we have to look at this through a prism of a market that’s on the verge of a breakout.
Brent Crude Oil Technical Analysis
Brent markets also look like they are trying to break out, slamming into the top of the consolidation area. With potential production, it does make sense that we would continue to see upward pressure, but it’s obvious that the market has a lot to think about. A recession would be negative for crude oil, as demand drops and therefore the question now becomes whether or not OPEC will cut enough to make a huge difference.
This is a balancing act for OPEC, because they need to sell crude oil, but they also need it to be a reasonable price for their budgets. All things being equal, I think this is a market that is turning into a “buy on the dips” scenario, and I will remain bullish of crude oil going forward. Even if we do fall from here, I suspect it is probably only a matter of time before buyers come into take advantage. With this, be nimble, but also recognize that we are possibly in the midst of a trend change.
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.