The light sweet crude oil market has gone back and forth to show signs of hesitation, but at this point in time, we are sitting just below the $100 level.
We did bounce from the 50-day EMA and that does matter.
I think ultimately you have got a situation where if we can break above the $100 level, then $105 could be very real. Breaking below the 50-day EMA opens up a drop to the 50% Fibonacci retracement level of the bigger move going back several months, possibly even opening up a drop down to the 61.8% Fibonacci retracement level near the $86 level. The $105 level has proven to be very difficult, and if we can break above there, the $110 level is, in fact, where we go longer term.
Market Dynamics and Outlook
All things being equal, I expect a lot of choppy behavior out of oil because, quite frankly, we have got a bunch of people in the news throwing headlines around to move the markets and not really anything fundamentally driven other than the fact that there is going to be a shortage, no matter what people think or want.
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A move above the $110 level opens up the possibility of a move to the $120 level before it is all said and done, but I do not see that happening yet. All things being equal, I do think that we are trying to find some type of summer range from which to trade in, and with that, I look at this as a market that, quite frankly, if we get an opportunity to buy the dip, you probably want to.
I just would not look for huge gains. I think finding a little bit of value in oil makes a certain amount of sense this time of year, but again, remember, this could be moved by the latest tweet or press conference, you just do not know.
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