WTI Crude Oil

The WTI Crude Oil market had a very positive session on Monday, gaining over 5%. We are just below the $42 level, and now it appears that the market is completely ignoring the supply and demand equation, and is only paying attention to the potential drilling freeze. However, the biggest problem that I see in this market is that the OPEC countries cannot curb US and Canadian production which is absolutely flying out of the country. With this, it’s only a matter of time before the sellers return.

Having said that, there is probably a short-term buying opportunity on short-term pullbacks, but you’re going to have to deal with quite a bit of volatility and uncertainty. Ultimately, I’m not a big fan of buying this market simply because the trade does not make sense at this point.

Natural Gas

Quite frankly, out of the 2 trades in this article I believe in shorting the natural gas over being involved in the WTI Crude Oil market. This is because we are in a long-term downtrend and of course we have formed a very negative candle. Because of that, it makes much more sense to follow the longer-term trend. Besides, it’s obvious that the supply out there for natural gas is far too strong for the demand. Yes, US drillers have started to walk away from both fields, but at the end of the day it’s going to take quite a bit of a change overall to turn the market back around. Ultimately, this is a market that will continue to struggle overall, because not only do we have an overabundance of supply, we also now have the northeastern part United States going into the spring season, which of course will damage some of the demand that could potentially be out there. With this, I am a seller on short-term rallies that show signs of exhaustion, and of course a break down below the bottom of the range for the Monday candle.