The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) -- There is very little in the way of news headlines to directly impact crude oil valuations, and potential price action looks set to continue the choppy and overlapping trading patterns that look to have found support. Trade desk updates recently highlighted continued consolidation above 95.00 on West Texas Intermediate (WTI) (96.80), and for USO (39.50), the ETF that tracks oil momentum, to consolidate above 37.50.
Expectancy is for a break higher in crude prices in the near-term. Any existing short-oil positions should be closely monitored while recent price action is absorbed. USO looks to have some catching up to do to match recent oil buying, and is expected to test resistance at 39.90.
Oil Price Action:
Strong buying activity was seen at 97.00 on WTI in April and May. This potential price reversal area (swing point) found buyers recently and will be closely monitored as an area of strong support. Market alerts will be sent to subscribers as momentum builds.
Main WTI support: 93.50. Main WTI resistance: 101.50.
ETF Price Action:
Strong buying activity was seen at 42.00 on USO in April and May. This potential price reversal area (swing point) will be closely monitored if price action breaks 40.00 and targets 42.00 going long. Market alerts will be sent to subscribers as things unfold. Upside resistance will now be very strong.
Main USO support: 36.50. Main USO resistance: 40.50.
WTI 100-day Simple Moving Average (SMA) is at 99.00. WTI has a 36-month 75% correlation to S&P moves, and a 90% correlation to the euro (Eur/Usd) currency pair.
Daily trading range on WTI is $2.70, which is above the historical norm and indicates increasing speculative interest.
There was a trade signal issued on WTI recently, looking for a break of 99.65. Clients will be notified when price action confirms further upside potential.
Sentiment toward WTI trade is mixed after recent tests of support held, and market participants stepped in to buy. Price action favors a move through resistance in the near-term. Traders committing to oil trades at these levels need to reduce trade size, as volatile intra-day trading patterns are likely to continue in the near-term.
TheLFB trade desk generates trade signals that highlight specific price points to trade from, and market alerts that highlight sentiment changes. Clients receive detail on gold, silver, crude oil, equity indices, equity ETF's, the dollar index, and eight major currencies.
Marco Hague is one of the founders and principals of The London Forex Broadsheet (commonly known as TheLFB), a global forex trader portal with headquarters in the U.S. Hague began his career with the Bank of England dealing with foreign exchange control, and he has been trading for the last three decades. He has been involved with institutional risk asset ratio analysis and the implementation and maintenance of institutional trade desks globally.