Crude Oil Price Forecast – Crude Oil Recovers Slightly on Tuesday

WTI Crude Oil

The West Texas Intermediate Crude Oil market rallied a bit after gapping lower at the open on Tuesday. At this point, we are simply trading on the idea of stimulus, and nothing more. That is what is driving the commodity trade in general, not necessarily the idea of demand. (Yes, I understand that stimulus is supposed to drive up demand, but it has in the last three times.) Nonetheless, it is the game we are playing right now so looks like buying dips continues to work. I believe that the $50 level is the “floor the market”, with the $55 level above being the current resistance barrier that the market is eyeing. Pay close attention to the US dollar, because the inverse correlation probably continues.

Crude Oil Video 20.01.21

Brent

Brent markets also gap lower to kick off the trading session only to turn around and show signs of life again. By doing so, the market then looks likely to test this $56.50 level that had caused resistance during the previous session, and perhaps even go higher. You could make an argument for a little bit of a bullish flag, but at the end of the day it is probably a weak one at best. The Brent market of course continues to move based upon the idea of the reflation trade, which although in full effect right now, certainly has to be thought of as precarious at best. After all, it seems like the matter what happens, there are more lockdowns coming on an almost daily basis. Looking forward, the idea is that we will be beyond that, but crude oil demand was slipping before the virus hit.

For a look at all of today’s economic events, check out our economic calendar.