People who have missed the move higher will certainly want to get involved with what has been one of the strongest trends over the last year or so.
The West Texas Intermediate Crude Oil market initially gapped higher on Monday, but then turned around to show signs of hesitation. By falling the way it did, it attracted a lot of bargain hunters, and then turned right back around to form a bit of a hammer. This is the second hammer around, and it certainly looks as if the $90 level has a certain amount of influence on price.
All of that being said, it should be noted that we have been getting conflicting headlines as far as the situation in the Ukrainian frontier sorting itself out. We obviously had a lot of fear in the market at the open, but shortly after the futures market opened, it was announced that Biden and Putin would more likely than not be meeting relatively soon, and this defused some of the tension. Nonetheless, Vladimir Putin now looks ready to recognize the eastern part of Ukraine that has broken away, flaring tensions yet again. Beyond that, there has been a significant amount of noise in the press that Vladimir Putin has already given the order to attack.
At the time of writing, nothing has happened.
Nonetheless, you should keep in mind that the market had been in an uptrend anyway. The entire world waking up at the same time from the pandemic and trying to get things moving has a major demand component which will make a significant push to higher prices. At this point, the $87.50 level has offered support previously, and I also believe that the $90 level offers support as well. This is a bit of a “perfect storm” for crude oil, and I think it is probably only a matter of time before we go to the $95 level, and then possibly after that the $100 level which is a target I expect to see hit rather soon, most certainly by the time we get to summer.
Any type of major breakdown from here will attract value hunters, at least until inflation and geopolitical conditions change. Therefore, I think it is probably only a matter of time before any dip attracts quite a bit of attention, so people who have missed the move higher will certainly want to get involved with what has been one of the strongest trends over the last year or so.
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