Schork Oil Outlook: $75 Crude Means Nothing

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.


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.