- Classical speculative trading conditions were seen in WTI Crude Oil last week.
- Last Monday started with some slight selling in which the 70.100 realm was challenged, followed by incremental buying, and leading to the week’s apex near the 73.090 ratio late on Thursday. And then like healthy commodity markets often do, fundamental insights began to show force as selling suddenly went from incremental to fast velocity downwards.
- WTI Crude Oil went into the weekend a hair under the 70.000 realm. A closing price around 69.985 USD can be seen on many brokerage platforms. WTI Crude Oil is below the 70.000 level for the first time since the 30th of December.
- Tomorrow’s opening will present traders with an immediate important price barometer to start the week.
Technical traders looking at one month charts of WTI Crude Oil do not have to struggle to see a lower trend. A look at a three month chart gives another perspective. WTI Crude Oil is now perched on rather intriguing psychological ratios which will stir the minds of day traders. The ability to come back to 70.000 USD after touching the 79.300 vicinity in the middle of January lends some insight into behavioral sentiment among large energy players.
The Trump administration’s policy of pro-active energy production, combined with their stated goal of seeking a resolution to the war between Russia and the Ukraine has not have produced fundamental results in supply yet. There has not been enough time for supply to change dramatically, but supply was relatively good before Trump took power in the White House and now it is likely to improve.
The perception that U.S producers and traders will have more access to energy including WTI Crude Oil though is a factor already. This helps create headwinds on the price of WTI Crude Oil via outlooks, because it is believed supply will not only be strong, but that production levels and the potential of Russia once again being able to sell energy into expanded global markets will factor into prices.
Day traders need to take into account that large traders in WTI Crude Oil are not only making short-term orders in the market, but more importantly they are powering the futures markets via WTI Crude Oil, which effects the cash price and most active month of price action in the commodity.
- The fact that 70.000 USD has now been hit is not a surprise.
- The downwards price action since the Trump administration took office is not an accident, it is a result of outlook becoming attuned to the notion supply and production will remain strong and improve in WTI Crude Oil and other energies.
- The question is how the 70.000 ratio will behave this week.
- If WTI Crude Oil starts Monday and Tuesday with sustained trading below the 70.000 this would be a bearish signal that additional price action can be sustained in a lower range, perhaps challenging early December 2024 values.
The price action in WTI Crude Oil last week was a classical case in speculation because although the fundamentals in the commodity indicate that prices should be lower, the value of WTI actually went up early in the week and into Thursday. This should serve as a lesson for day traders who need to acknowledge the market doesn’t always act as it is anticipated. Short-term wagers always face a challenge via reversals higher and gyrations. However, moves higher in WTI Crude Oil will continue to work under the shadow of solid supply and production in the near-term and likely into the mid-term.
Moves higher in the commodity are likely to be met with selling power which were seen last week. The question about where resistance levels will prove durable is dangerous, because there are no set answers, except to say technical perceptions seem to suggest anything above 72.000 USD in the coming week would appear to be overbought. Traders looking for 69.000 may be too ambitious if they are using leverage and have short-term timeframes, but looking for values below 70.000 to remain a battlefield does feel like a logical wagering prospect.
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