The West Texas Intermediate Crude Oil market has fallen during the trading session to threaten the uptrend line that we have been paying so much attention to most of this year. At this point, the market is solidly below the 50 Day EMA, so therefore short-term momentum is definitely swinging to the downside. Because of this, it is very likely that the market may continue to threaten the $90 level, and a breakdown below there almost certainly would have a devastating psychological effect on the market.
To the upside, we need to break above the 50 Day EMA in order to get bullish, and even then, I think it is a bit of an uphill battle. The world looks to be heading into a recession, and that will destroy demand for crude oil.
Brent Crude Oil Technical Analysis
Brent markets have also fallen during the day to pierce the trendline. At this point, it looks as if we are threatening a significant breakdown, and it is not until we break above the $103 level that I would be considering going long in this market. Brent is going to face a lot of the same problems that the WTI grade is, that a global recession will almost certainly cause demand destruction. The markets had gotten far ahead of themselves, and if we do go into this recession, it is difficult to imagine where demand is going to be sky-high. Now that the initial “push higher” in demand for everything it has happened after the lockdowns ended, now we are starting to focus on whether or not there is sustained momentum. At this point, the market does not seem convinced.