Crude Oil Forecast February 7, 2017, Technical Analysis

WTI Crude Oil

The WTI Crude Oil market trying to rally on Monday, but gave back most of the gains. The market looks relatively flat though, and with this being the case it’s difficult to get overly excited about trading. I believe this point we will probably try to drop towards the $52.50 level, as the market seemed complacent recently. Perhaps they are wondering whether we will have to worry about OPEC production comes, or if it’s more likely that we’re going to have to worry about the inventory builds that we keep seeing in the United States. Demand seems to be lacking at the moment, and several economies around the world are stagnant at best. Because of this, I prefer selling longer-term, but I also recognize that we are range bound at the moment, so I’m not looking for large moves.

Brent

Brent markets also trying to rally at the beginning of the session on Monday but turned around to start selling off. I believe that this market is going to reach down to the $55 level, where there will be a significant amount of support. If we can break down below there, the market will then look to the $53.50 level underneath that. This is a larger consolidation area, and we are towards the top of it so it makes sense that we would see some selling. I don’t think that the markets ready to make any significant moves though, so I look at this as a short-term trading type of environment.

Pay attention to the lack of demand, I feel that the markets are finally starting to look at the longer-term picture again. After all, the OPEC production cut can help and the short-term, but it will have no effect on Canadian or American drilling. The markets are simply awash with oil at the moment, so any rally that happens can only go on for so long. I also suspect that some OPEC countries are meddling in the futures markets, but eventually that is a strategy that fails. Given enough time, I do think we breakdown.