Crude Oil Price Forecast – Crude Oil Markets Discovers Gravity

WTI Crude Oil

The West Texas Intermediate Crude Oil market rallied significantly during the trading session on Tuesday only to give those gains back up. By doing so, it is at least acknowledging the fact that the market is a bit over bought, and that a pullback is not only likely, but more than likely going to be necessary at these extreme conditions. The $60 level of course is an area that will attract a lot of attention nonetheless, so I think at this point it makes a certain amount of sense that we get a bit of profit-taking. To the downside, I believe that the $57.50 level should end up being support.

Brent

Brent markets also ran into a bit of trouble after initially gapping higher. The $63 level, or at least the area above it, is starting to offer significant resistance. I think it does make sense that we pulled back here as well, and the fact that the US dollar is being slightly supported by higher yields in the 10 year note certainly will not be ignored either. Nonetheless, one of the biggest issues we have right now is that a huge part of the United States is frozen, and therefore supply might be somewhat constrained in the short term.

Nonetheless, this is a market that has simply gotten way ahead of itself and therefore I think the pullback makes quite a bit of sense. I would anticipate the “floor in the market” to be somewhere closer to the $60 level. Breaking down below there could lead to even more selling but in the meantime, I still think the market is looking towards the $65 level above.