(MENAFN- Daily Forex) Potential signal:

• If we get anywhere near the $65 level and show signs of exhaustion, I have no qualms whatsoever of shorting this market with a stop loss at $65.75.
• I'd be aiming for a pullback toward the $63.50 level. You will need to be nimble.

The crude oil market rallied during the trading session on Thursday, as we have seen the market attempt to break higher and find some type of floor underneath. We formed a hammer during the trading session on Wednesday, which suggests that there are value hunters down near the $62 level, where we have seen previous support. All things being equal though, this is a market that I think still has a massive amount of overhanging pressure that it will have to deal with in this environment.

Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Massive Amounts of Supply

There are massive amounts of supply for crude oil at the moment, as the United States is now drilling and producing more crude oil than it ever has, and of course Russia is flooding the market with its recent announcement of increased production. Beyond that, OPEC has announced that it is going to produce 500,000 more barrels per day during the month of September. In other words, oil is not something that we are lacking at the moment, and despite the fact that demand could be slipping also, it's interesting that everybody is clamoring to make as much profit as possible.

Understand that the players involved in this scenario have different issues. Russia obviously has to deal with a lot of international sanctions, so flooding the oil markets with their product is one way to insulate the Russian economy. OPEC is a different situation altogether. Quite frankly, most of the income for OPEC nations comes from crude oil, and if they are starting to struggle economically, they will start pumping out more crude in order to make up for the lack of economic growth via massive amounts of volume. The United States is completely different because quite frankly, it doesn't even need to pump oil. Think of the US as producing more oil in order to drive the price down. But it isn't that the individual companies are looking to do that, but the US government is most certainly encouraging them. Beyond that, the United States has to refill its Strategic Petroleum Reserve from the emptying of it by the Biden Administration. In other words, a lot of the crude oil that the United States is drilling might actually be going back into the SPR. Nonetheless, we are seeing a potential slowdown economically worldwide, and if that's going to be the case, I think oil has a hard time breaking out to the upside.

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