The oil market made new year lows again yesterday as the downtrend continues in daily oil prices. We are still seeing any bounce being sold into which is a feature of downtrends, and although the price of oil has fallen over $85 dollars in last three months, I would advise against trying to pick the markets bottom and only enter a long position, for anything longer than a day trade, when the technical picture has shown us a signal of the trends reversing. The short and medium term trends are still bearish while the long term trend is sideways.

1. Support: $60.06 (low of 27/10/08) Resistance: $63.96 (low of 22/10/08)
2. Support: $59.47 (yesterday’s low) Resistance: $63.59 (high of 27/10/08)
3. Support: $58.46 (low of 09/02/07) Resistance: $62.95 (yesterday’s high)

Summary:

The oil market is finding some strength on the back of the stronger global equity markets and buying from speculators who feel that this market is now oversold. While it is true that the downtrend could afford a decent rally without showing signs of reversing, I feel that the big picture is dominated by falling demand due to world recession and would expect any rally to be sold into. As always on a day of DOE stats I am anticipating a volatile market with many opportunities for the day trader, so watch out for short term intraday trades.

DOE Stock Estimates (Change in millions of barrels)

Crude +1.6 Gasoline +1.3 Distillate +0.7