Crude Oil markets show extreme volatility on Tuesday

The crude oil markets initially tried to rally during the session on Tuesday but then rolled over to the downside, as we continue to bounce around in consolidation. I see plenty of support underneath though, and therefore I think that as we calm down late in the day, and it looks likely to be a continuation of the overall consolidation that we have seen. · FX Empire

Christopher Lewis

Updated Tue, May 15, 2018, 10:52 PM

WTI Crude Oil

The WTI Crude Oil market initially rallied on Tuesday but found enough resistance at the $72 level to turn around and fall significantly. We found support at the $70.50 level, and I think a lot of this may have to do with the US dollar strength that we saw and currency markets. After all, crude oil demand is picking up and it seems like we are getting continue to see buyers jumping into this market, but keep in mind that hedge funds and their algorithmic trading looks at correlation with currencies, meaning that if the US dollar takes off, they will quite often automatically sell oil. Now that things have calmed down, I believe that there is support underneath.

Brent

Brent markets continue to show strength overall, as soaring demand continues to be a major issue. I think that the market will continue to respect the $77 level as support, and I think that the overall buyers will continue to be impressed on these dips as it being value. I think the $80 level above is resistance, but I think that given enough time we could break above there as well. The $77 level underneath is support, and the $75 level underneath is a “floor.”

The US dollar rally in the way it has during the day of course has sold off oil in general in a quick move but were still in and uptrend so there’s no need to fight it.