WTI Crude Oil Forecast: Continues To Break Down| MENAFN.COM

Friday, 09 December 2022 03:27 GMT

WTI Crude Oil Forecast: Continues To Break Down


(MENAFN- Daily Forex)
  • The West Texas Intermediate crude oil market fell again during the trading session on Wednesday, reaching toward the bottom of the hammer that formed on Monday.
  • At this point, it looks like there's not much interest in owning oil, because that rally was short-lived to say the least. Remember, on Monday somebody leaked the rumor that OPEC was going to increase production by 500,000 barrels a day, forcing Saudi Arabia to step out and deny this rumor.
  • Once they did, prices recovered for a little bit, breaking above the $80 level, but we have now broken back through there.

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If we were to break through the bottom of this“double bottom”, that opens the possibility of a move down to the $75 level, and then possibly even down to the $72.50 level. That would obviously break the back of the support, and it also draws into question whether demand is going to be enough to lift pricing. After all, OPEC has recently cut production by 2 million barrels a day, and although we did get a little bit of a bounce after that, the markets have done nothing but fall since then.Oil Could Fall Apart

On the upside, we can take out the highs from the Tuesday session, then it's possible that we could go looking to the 50-Day ema above, which sits just above the $85 level. At this point, I think it's going to take quite a bit of effort to get above that area, but it could open the possibility of the 200-Day EMA, which sits just above the $90 level. Keep in mind that crude oil is the“lifeblood” of global markets, and it needs economic activity to sustain pricing power. As freight movement has ground to a halt, it does make a certain amount of sense that crude oil demand is dropping off the cliff. In the global recession, oil gets absolutely crushed.

Keep in mind that Thursday is Thanksgiving in the United States, which will put a huge dent in volume. There will be some limited electronic trading, but the hours will be sparse. Furthermore, Friday will also be thin, as most of the larger American traders won't be bothered coming back into the office. Ultimately, in the thin environment, we could see oil fall apart.

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