WTI Crude Oil Forecast: Price Forms Massive Range

　　The West Texas Intermediate Crude Oil market initially gapped for the open on Monday and then shot all the way up to the $130 region. We have fallen below there to show signs of exhaustion and then fell all the way back towards the $120 level. The market forming a massive shooting star type of candlestick for the day does suggest that perhaps we are ready to have some type of significant pullback. This pullback would be the most likely scenario going forward, as we have gotten far too ahead of ourselves.

　　The alternate scenario would be that we broke above the $130 level, but I just do not see that happening very easily. After all, we have so much in the way of overbought conditions right now that it is difficult to imagine where people would find value. Yes, we could get some type of shock to the system that makes the market go parabolic, but during the session we had already tried to price in the idea of Russian oil going off-line completely.

　　Regardless of what happens next, you simply cannot chase this market. Yes, there were huge gains to be made at the open during the Asian trading on Monday, but you should also keep in mind that a lot of liquidity was missing at that point in the day as well. The fact that we gapped higher and then essentially went nowhere from there was a bit astonishing, but it also shows you that given enough time this market will pull back and when it does, it is very likely that the pullback is going to be significant.

　　Even with a significant pullback, there will still be plenty of reasons to buy the crude oil market, not the least of which will be the fact that even with Russian oil, the supply of crude oil to the world has been very tight for some time, and more likely than not will continue to be. Beyond that, we also have the reopening trade, when economies around the world are going to continue to be opening up and looking likely to demand more and more oil. In that scenario, it looks like we have a one-way market, but that does not mean that you should just jump in right away.