WTI Crude Oil
The WTI Crude Oil market went sideways initially on Monday, but then bounced as it was announced that the sallies were anticipating cutting back on production drastically. This caused the market to rally rather significantly midmorning in Europe, and the market has hung on to the game since then. However, it is not necessarily a convincing rally, and I believe it’s only a matter of time before the sellers return. On signs of exhaustion, I expect this market to turn around and start reaching towards the $45.50 level again. Even with the Saudi cutbacks, there are far too many avenues of supply out there, and the Americans will be more than happy to make up for any loss supply that the Saudi’s are responsible for. Because of this, I think rallies will be short-lived.
Crude Oil Video 25.7.17
Brent
Brent markets of course had a very similar reaction but quite frankly everything that I have written for the WTI market I could write for the Brent market. Oil is simply far too oversupplied, and Saudi Arabia can only cut production for so long, as it is highly dependent on those exports. Quite frankly, Saudi Arabia is in a bit of a no-win situation, so I think they will eventually have to increase output. The market should selloff rather soon, and when it does I believe the market goes looking for the $47.75 level again. I would be very surprised if the market managed to reach the $50 level, let alone break above it. I am a seller rallies type of traitor in this market, and I believe this only gives us an opportunity to sell from higher levels although I want to see it roll over first before I put money to work.
This article was originally posted on FX Empire