Crude oil markets kicked off the week on a soft footing, reaching down towards the support levels underneath. At this point, the question is whether or not they will hold?
WTI Crude Oil
The WTI Crude Oil market fell initially during trading on Monday, reaching down towards the $68.50 level in early trading. We are starting to trying to find some type of support there, but at this point it’s not clear as to whether or not that support will hold. Ultimately, I believe that the attitude of the markets continues to be very skittish, because we have so many moving pieces right now. When you look at the trade embargo with the Iranians, that should be good for oil prices, but at the same time there are reports that possible production boosts from both Saudi Arabia and Russia could be in the mix, and that of course would be very bearish for the market. Regardless, I think we are simply unwinding some of the over exuberance that we had seen. I do believe that eventually we are going to find some value hunters, so patients will probably be needed.
Brent
Brent markets also fell early in the day, reaching down to the $79 level. This is an area that has been supported in the past, and I think it should be supported in the future as well. I believe that the buyers could come back, but I’m not ready to put money to work quite yet, because markets are simply too skittish at this point. The attitude of traders continues to be one of unwinding, but I do think value will come into play rather soon. A break below the $79 level will more than likely send this market down to the $78 level next, which should be rather supportive as well. We’ve been in and uptrend for some time, so unwinding that uptrend would be very difficult.
