- The light sweet crude oil market has rallied a bit during the trading session on Tuesday, gaining over 2 % as it looks like we are in fact doing everything we can to form some type of bottom.
- Ultimately, that does make a lot of sense because typically at this time of year, you do see more demand.
- And let's be honest here, crude oil was so oversold that sooner or later we had to see buyers jump in and take advantage of cheap barrels of oil.
Furthermore, though, you need to keep in mind that the $65 level above is an area that has been important multiple times and previously has been support. So, market memory comes into the picture.
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$65 Could Be Important
If we can clear the $65 level, I expect we see more of a grind towards the $72.50 level. Short-term pullbacks, do think attract plenty of value hunters, as previously mentioned, with the $60 level being a massive area going back, historically speaking. And in fact, when you look back multiple years, the area between $60 and $65 has been a point of inflection.
So if we can go to the upside from here, oil will have saved itself as we head into the busier season. And I think one of the key factors might be a resumption of trade and driving season combined. We could see oil spike towards the 50 day EMA initially, followed by the 200 day EMA and then eventually the $72.50 level, which had been important. Oil does tend to trade in ranges, so there is the possibility that we just hang out in this area between $60 and $65. But right now, it certainly looks like the buyers are starting to gain the upper hand, as every time we have pulled back, we've seen a squeeze higher.
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