The light sweet crude oil market did try to rally a bit during the early part of the trading session here on Wednesday, as we are sitting right here at the major trendline.
That being said, this is a market that I think continues to hover on a lot of different things at the same time, not the least of which would be the fact that the headlines in the Middle East continue to be major movers of what we think could happen with supply. The market will continue to focus on that and, of course, the idea that traders will continue to see the distillates and refined products as a major mover of the way things are going as well.
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All things being equal, this is a market that is testing the 50-day EMA and the crucial $90 level.
I think both of those will eventually matter, but if we were to break down from here, we could go looking to the 200-day EMA, sitting right around $83. The $95 level above is a bit of a barrier; breaking that would be extraordinarily bullish.
I do think that the risk still lies to the upside because, quite frankly, we don't get many good headlines on the Middle East that last that long. So, one would think it's probably only a matter of time before the Iranians launch another attack, perhaps trying to goose the market.
But it's also worth noting that more oil is getting out of the Strait of Hormuz, so there is a little bit of relief here. I anticipate a lot of push and pull in an upward channel.
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