WTI Crude Oil
Crude markets fell on Tuesday, and the WTI grade of course was no different. Today we get the Crude Oil Inventories announcement, and that will certainly have an influence on this market. As I record this, we are touching the 50-day exponential moving average, which of course offers dynamic support. I believe that there is support all the way down to the $50 level, but the fact that we broke down below the $52.50 level tells me that there is a good chance that the sellers will continue to jump into this market. We are expecting an inventory build, so that of course will work against the value of oil in general. If we do bounce from here, the market will probably run into a significant amount of resistance at the $54 level.
Natural Gas
Natural gas markets shot higher on Tuesday, as we continue to bounce from the $3 region. However, there are more than enough reasons to think that this market will run into a lot of bearish pressure. The $3.25 level above will offer enough resistance to turn things around and form and exhaustive candle in my opinion. Even if we don’t turn around there, there are plenty of areas all the way to the $3.50 level the can reduce the same type of reaction. I believe that the bounce that we have seen makes a lot of sense as the $3 level has a lot of psychological importance, but given enough time I expect to see this market not only breakdown below the $3 level, but then go looking for the $2.60 level under there.
Ultimately, this is a market that’s running out of the cold weather in the United States, and that of course is a major hit to demand. It’s been a mild winter, and that continues to put bearish pressure on this commodity.
