During the day on Tuesday, the WTI crude oil market fell slightly, in order to show signs of weakness. However, I believe that there are several things working in this market’s favor, especially considering that we get the Crude Oil Inventories announcement coming out of America today, and with that being the case we could get a bullish number.
On top of that, we get the FOMC Statement coming out today, and that should continue to offer quite a bit of volatility in the US dollar, which of course has a massive amount of effect on the value of commodities in general, and oil markets of course are no different.
WTI crude oil testing support
The WTI crude oil market finds itself on the $48 level, which is a massively supportive level. After all, we have seen buyers step into the market in this area. However, we also have an uptrend line as well, so having said that there is plenty of reasons to bounce from here.
Also, do not forget that the 50 day exponential moving average is just below, and of course has recently crossed over the 200 day exponential moving average, which of course the 100 day exponential moving average did as well. In other words, we are very much in an uptrend still, so a break above the top of the range during the day on Tuesday would be significantly bullish enough to have me buying right away.
There are still plenty of reasons to think that the oil markets could go higher, especially if the Federal Reserve steps away from an interest-rate cycle, which of course brings down the value of the US dollar, which should naturally lift oil markets.
However, there will be a lot of volatility due to the fact that the jobs number was so bad, and although that’s good for cheap money, it’s not good for industrial demand necessarily. Ultimately, we need some type of momentum building to occur in order to go higher. If we drop below the 50 day exponential moving average, then I would have to reevaluate the entire situation.