The light sweet crude oil market initially dipped during the trading session on Wednesday, but the noise coming out of the Middle East will remain important.
 

Light Sweet Crude Oil

The light sweet crude oil market initially dipped during the trading session on Wednesday but then turned around to show signs of life again. This is a market that, given enough time, will have to deal with the 200-day EMA above. What we are all sitting here waiting on is to determine whether or not the Americans attack the Iranians or the uprising gets put down between now and then. We just have to wait and see. This is all about geopolitics, and we have had a lot of that recently with the capture of Maduro out of Venezuela, causing some chaos there.

Longer term, the reality is we have more than enough oil. The Iranians will get their oil to Europe. They will get their oil to China and India, which is where they send it first, and then it goes to Europe and Africa, and places like that. It is all third-party buying-type situations. We all pretend like there is an actual embargo, but we buy our oil from India or Myanmar or some other place that does not actually produce oil, and then we use it.
 

Geopolitical Risk and Technical Targets

The scenario really hasn't changed. There is a little bit of geopolitical risk here, but that geopolitical risk is something that I am more than willing to fade. You can see when the Israelis attacked the Iranians, and then it became clear that the oil situation—they didn't hit any of the oil infrastructure—we just melted down from there. At one point, we were at $78, and then we fell all the way to $55.

I am looking for something similar to that. We don't have that signal yet. The next day or 2, we are going to nervously tread water here near the 200-day EMA. There could be some money to be made to the upside on a panic move, but I suspect sooner or later, people will start to pay attention to supply and demand. That is going to be the main driver. In fact, I am very curious to see if we can break the 200-day EMA because the $66 level could be your next target where I'd expect to see some problems.

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