Spot Nymex crude oil closed above $75 for the first time in a month. Of course, the difference between these two milestones was… a month ago the market was entrenched in a violent sell-off, today we are in the midst of the rebound from that weakness.
What’s so special about $75? This dollar amount, plus another $1,500, might get you a decent seat at Yankee Stadium to watch the Yanks play Cleveland. Outsight of that, $75 means absolutely nothing. In other words, getting the market back up to this point has been the easy part.
Now that we have been back over $75, the bulls will have to play the varsity. That is to say, we are now on the cusp of the 200-day moving average, 76.73 and the 62% retracement, 77.57 (ratio scale).
Bullish momentum stalled 43 cents below the 200-day yesterday. We are not impressed so far, but do acknowledge that we are likely ramping up for another run to the mid $80s, i.e., similar to where we were in September, December and February.
In this vein, we will need to see a close above the 62% retracement before we here at The Schork Reporthop on the bandwagon.
Meantime, Nymex WTI moved higher for a third straight session and oil volatility (CBOE OVX) closed below 40% for the first time in a month. In other words, the market is rallying and sentiment is jumping on board. Bears should take notice.
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Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.