Crude Oil Weekly Forecast - 06/04: Energy Sector (Chart)

(MENAFN- Daily Forex)

• WTI Crude Oil went into the weekend near the 61.950 price. At its lowest ratios on Friday the price of WTI Crude Oil traded near the 60.400 level. The broad financial markets were violently lower on Thursday and Friday as large financial institutions clearly demonstrated their nervousness in the wake of President Trump's tariff policy which was announced late on Wednesday.
• Forensically it is hard to say that the move lower was an over reaction quite yet in WTI Crude Oil, but it is clear that among the bursts lower the 65.500 and 64.500 vicinities both created downwards momentum when they showed sustained trading below these technical indicators.
• The question some are asking is why WTI Crude Oil suffered a dramatic selloff, when tariffs are not supposed to directly effect energy.

Value Mid-Term Implications for WTI Crude Oil

Behavioral sentiment is clearly nervous and early trading tomorrow will not be easy for speculators who have limited funds. Volatility will remain noteworthy and it is not guaranteed that investors will step in and start looking for value buying quite yet. Impetus regarding the broad market selloff was certainly sparked because there was a lack of surgical – disciplined – explanations regarding the wide tariffs imposed by the White House. Therefore in the WTI Crude Oil market big players likely felt uncertain about mid-term energy demand if tariffs spark retaliatory actions by other nations – a trade war.

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The prospect of lower demand because of concerns that manufacturers will have less reason to purchase WTI Crude Oil may prove to be a knee-jerk movement in the energy sector. However, the move lower was legitimate, but showing that some semblance of logic remained in the WTI Crude Oil market, the price did reverse higher when lows of 60.600 and 60.400 were being tested on Friday for Calm in a Sea of Heavy Waves

Day traders may feel tempted to believe the worst is over in the broad markets and that some optimism will start to shine in the WTI Crude Oil market. Yet, behavioral sentiment will be coming off a weekend in which large financial institutions may not feel like they have been given any positive news.

• If the broad markets selloff in Asia tomorrow morning via equity indices this could feed into renewed pressure on WTI Crude Oil near-term.
• The energy sector is likely to remain nervous early this week until calm prevails, WTI Crude Oil traders should be extremely careful.
• Perhaps some bearish traders in WTI Crude Oil got lucky last week when early highs started to reverse lower and the same speculators were able to hold onto short positions through the strong selloffs.
• However, trading early this week technically will likely now be at the mercy of swift waves caused by sentiment storms which will remain volatile.

WTI Crude Oil Weekly Outlook:Speculative price range for WTI Crude Oil is 59.700 to 63.500

As late as Wednesday WTI Crude Oil bullishness was being displayed as the 72.000 vicinity was being challenged. However, the spikes lower on Thursday and Friday were a direct result of nervousness being produced as the broad market traded within a dark shadow of fear. WTI Crude Oil will now be tested to see if it can recover what had been a well-practiced range between 66.000 and 69.000 USD.

But perhaps that is wishful thinking in the days ahead. WTI Crude Oil traders if they dare to participate in the coming storms which will certainly be seen early this week will need to be prepared for definite fast conditions akin to gambling. For the time being it feels more likely that a lower range is going to be tested in the coming days. A lot will depend on Monday's results in the broad markets. If massive buying takes place then a more positive light can be shined on WTI Crude Oil, if there is more strong selling in the broad markets, additional lows would not be surprising in the energy sector.

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