Crude Oil Forecast January 19, 2017, Technical Analysis

WTI Crude Oil

The WTI Crude Oil markets fell significantly during the day on Wednesday, as we roll into the Thursday and face the Crude Oil Inventories number. I believe that there is a significant amount of support at the $50.50 level, and as a result I think that it will cause a bit of a barrier for the sellers, but if we can break down below the $50 level I think that the market will continue to go much lower. In the meantime, I think rallies will be sold off, because the markets are starting to show signs of exhaustion. With this being the case, I think that buying is going to be all but impossible to do as there is more than enough reason to think that the oversupply issue will continue, and of course the OPEC countries have a long history of skimping on production cuts.

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Brent

Brent markets initially tried to rally during the day on Wednesday, but turned around at the $56 level to show a very negative candle. The shooting star from the Tuesday session was your first hand that we were trying to roll over, so it looks now like we’re going to try to go down to the $53.50 level, and this will be exacerbated by the inventory number if it comes out extraordinarily bearish.

The US dollar course has a major influence on commodity markets in general that won’t be any different here. If we can break down below the $53 level, the market should then go to the $50 level next. Rallies will be sold, as the $57 level above starts a significant amount of downward pressure. I have no interest in buying oil, although I do recognize that the market is going to fight going lower. OPEC will jawbone the whole situation, but the reality is that the United States and Canada don’t care. They will continue to drill, they will continue to supply the market, and there will continue to be too much oil. The strengthening US dollar will only make that worse.