We have seen a lot of bullish pressure over the last several months due to this, and quite frankly we should continue to see more of the same.
The West Texas Intermediate Crude Oil market has gone back and forth during the course of the trading session on Wednesday as we continue to see a lot of volatility based upon not only the geopolitical concerns, but also the supply chain problems when it comes to supplying enough oil for a world that is starting to reopen again.
When you take a look at the last year, we did almost nothing to produce more crude oil, so the fact that we are now reopening everybody at one time, the demand is overwhelming the supply. We have seen a lot of bullish pressure over the last several months due to this, and quite frankly we should continue to see more of the same. Furthermore, we have a lot of inflationary problems and that could send oil higher as it typically rises and falls with inflation as well.
At this point in time, it looks as if the $87.50 level is offering support, while the $95 level above is significant resistance. At the moment, looks like we will continue to go back and forth, as we have seen of the last couple of days. If the Russians do in fact invade Ukraine, the market is more than likely going to go much higher, perhaps reaching towards the $100 level almost immediately. If we do get the Russians pulling away, then it is likely that we would see a bit of a pullback, but at the end of the day we still have a lot of supply issues, and therefore I think that buying on the dips continues to work.
Furthermore, the 50 day EMA is rising right along with the trend, so I do think that gives us another area of support, and therefore I think it is probably only a matter of time before we see value hunters come back in on any significant pullback. That being said, the market is likely to see a lot of volatility, just as we have seen over the last 48 hours. Because of this, the market continues to see a lot of opportunities for a short-term trader, but you still have to pay close attention to the fact that range bound trading still favors the upside, so if you choke up on the bat so to speak, you could find plenty of trading opportunities.
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