Crude oil markets gapped higher to kick off the week as traders are concerned about cooling relations between the United States and Saudi Arabia. The idea is that perhaps the Saudi Arabian government won’t be willing to increase crude oil output, thereby driving prices higher.
However, by the time the Americans had jumped on board, things that change quite a bit.
The WTI Crude Oil
The WTI Crude Oil market fell significantly during the trading session on Monday after initially gapping much higher, before reaching down towards the $71 level. This is an area that has been supportive, and it looks as if the buyers are willing to step in near that area. I also believe that the $70 level underneath is a massive support level based upon the round figure. At that point, I think if we break down below there the crude oil markets could be in serious trouble. I suspect that we will continue to have buyers underneath though, as we continue to see choppy trading conditions.
Brent
Brent markets tried to gap higher initially during the session on Monday as well but found the $82 level to be far too resistive. Because of this, we broke down to the $80 level underneath, which is an area that of course has a certain amount of psychological importance built into it. I think the $79 level underneath is massive support based upon the recent bounce, so now I think we may be trying to form a little bit of a basing pattern, but obviously we are very volatile, so I be very cautious about jumping in with too large of a position. Brent markets continue to be a “buy on the dips” scenario.
