Once breaking the psychological $39.00 support level fresh selling entered the market, along with stop loss orders, to send daily crude oil prices into freefall. As expected the 9 day moving average crossed below the 14 day, and after last week’s expiry of the Jan contract, this all adds to the technically bearish outlook. There is now good resistance above in the $39.00 – $39.35 area but a break above could push oil prices back up toward the short term moving averages some $6.00 higher than current levels. The short, medium and the long term trends are all bearish.

Support: $36.20 (yesterday low) Resistance: $40.60 (high of 24/12/08)

Support: $35.00 (psychological level) Resistance: $39.20 (low of 23/12/08)

Support: $34.00 (psychological level) Resistance: $39.00 (psychological level)

Summary:

The daily oil market was extremely thin on Tuesday (unlike yours truly after the excess of Turkey and trimmings yesterday) magnifying any directional moves. The key to daily oil prices seems to be market sentiment with long position holders more nervous to keep their positions ahead of the holiday period. Another good indicator of sentiment is how a market reacts to figures, hence bullish numbers in the crude were quickly discounted and attention was paid to the bearish product oil stats and further selling ensued. One needs to be wary in these illiquid markets and the price can move very quickly in either direction on what would normally be small orders being executed, so please trade with caution in the next few days.

DOE Stock Figures (change in millions of barrels)

Crude -3.1 (+0.2) Distillate +1.8 (unch) Gasoline +3.3 (+1.0)