April WTI crude oil futures are in the midst of a major market correction. At press time (about 1:00 PM EST), April WTI is off more than $2.75 per barrel. As we talked about earlier this week, the new-front month contract is now May, with more than 440,000 lots having already changed hands.

Today’s bearish action is a bit of a surprise, as the market remains fundamentally strong. However, a sell-off of this magnitude is worthy of note. Here are a few items that are weighing on WTI crude oil futures:

• Wednesday’s EIA crude oil stocks report remained positive, coming at +2.396 million barrels week-over-week.
• The USD is trending higher following yesterday’s Fed Announcements. For the session, the U.S. Dollar Index (DXY) is up by more than 0.30%.
• A “third wave” of COVID-19 is being witnessed by Germany, Italy, and France. New lockdown measures and vaccine bans are being announced.

All in all, these factors are short-term market drivers, at best. The action today is likely a product of institutional profit-taking. Nonetheless, new COVID-19 lockdowns can quickly destroy global demand and send WTI crude futures much lower. Does the “smart money” know something that we don’t? Only time will tell.

WTI Crude Oil Crashes, $60.00 In View

To be honest, today’s near-5% crash in WTI crude oil is a surprise. Subsequently, this market is quickly approaching corrective territory.

Bottom Line: The chart above is one last look at April WTI crude oil. As you can see, the past five sessions have been extremely negative. While an intermediate-term bullish bias remains warranted, it’s important to respect the magnitude of this week’s retracement.

Despite the sudden weakness, I’ll be looking to buy the dip. Until elected, I’ll have buy orders in May WTI futures queued up from $60.14. With an initial stop loss at $59.09, this short-term position trade produces 210 ticks on a 1:2 risk vs reward ratio.