The $80 level underneath of course has a certain amount of support attached to it, and therefore I think you need to recognize that the market could struggle to break through there, but once it does then we would almost certainly go looking to the most recent low.

• The West Texas Intermediate Crude Oil market has shown itself to be very noisy during the session on Thursday as we continue to see a lot of noise. Ultimately, this is a market that I think continues to be a “fade the rally” type of situation.
• The 50-Day EMA is sitting just below the $90 level, and it looks like it is going to continue to drop from here.
• In fact, when you look at the longer-term chart, you can see that it has acted a bit like a significant downtrend line.

I think at this point, any rally must be looked at with suspicion, as crude oil is so highly sensitive to the overall risk appetite of the world, and then of course the growth of economies, as crude oil is the “lifeblood” of any modern economy.

Demand Likely to Stall

This is a scenario where the market will continue to see a lot of choppy volatility, and therefore I think what we have is a situation where the sellers will continue to jump into the marketplace anytime they get an opportunity. The $80 level underneath of course has a certain amount of support attached to it, and therefore I think you need to recognize that the market could struggle to break through there, but once it does then we would almost certainly go looking to the most recent low.

The US dollar strengthening could of course put a bit of negativity in this market as well, so with that being the case is likely that we continue to see a bit of a drift lower. On the other hand, if we were to turn around a break above the $90 level, then it opens the possibility of a bigger move to the upside, but we would need to see economic growth and a loosening of monetary policy to facilitate that growth. I don’t think that this is a situation where crude oil is going to see much demand anytime soon, but we do have a longer-term structural issue that continues to put a little bit of a floor in the market. Furthermore, the Americans announced that they be willing to buy oil at $80 a barrel to replenish the Strategic Petroleum Reserve, but whether they do remains to be seen.