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MENAFN- Daily Forex)
The light sweet crude oil contract has shown itself to be a bit positive in the early hours on Thursday as we continue to consolidate overall. That being said, this is a market that I think you have to be very cognizant of the fact that it has been very negative for a while now. And therefore, it's important to be very cautious with your position size if you are trying to get bullish because it does look like we're at least trying to form some type of bottom.
Ultimately, this is a market that is paying close attention to the $60 level. So, let's look at that area as it's a large, round psychologically significant figure. And it's an area that has been important multiple times in the past.
Noise Will Be the Norm
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With that being said, I think the market will continue to be very noisy. I think it will be influenced by the latest tweet or headline as we try to sort out where the global economy is going to be heading. Tariff wars are horrible for crude oil because it slows down the transport of goods and services, and with that, it drives down demand.
Furthermore, there are concerns out there about the recession. And if that's the case, then demand for crude oil will drop there as well. Ultimately, I do think this is a situation where traders need to see a little bit of momentum, maybe above the $63.50 level, we could see this market go running to the $65 level. The $65 level, of course, is an area that had previously been support. So, it should in theory be resistance. Anything above there, then crude oil starts to become really interesting to the upside. If we break down below the $60 level, then we could see crude oil really start to fall apart. I don't know if we will see that in the short term. It certainly looks as if we are stabilizing. So that's why I think there's more of a buy on the dip mentality on a short term timeframe in this market than anything else.
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