WTI Weekly Chart 24 May 2010
Given the strength of the recent downwards trend in crude oil trading and its distorting effect on the daily oil chart, today’s analysis concentrates on the medium term with a look at the weekly oil chart. In the last three weeks we have seen a sharp sell off in oil, having first nudged the $87 per barrel level, to suddenly drop back to its current level of marginally above $70 per barrel. However, what is interesting on the weekly chart is that the three consecutive weekly candles, whilst all down bars, have dramatically narrowed in spread suggesting that the short term bearish reversal is now softening as crude oil price approach a technical bottom in the $70 per barrel region where a platform of price congestion now awaits. Provided this platform holds then we should expect to see crude oil prices stabalise in this area before recovering once again but for any medium term recovery we need to see the high of early May breached with conviction. The ongoing uncertainty in Europe is certainly now helping as oil markets fret over future demand in the eurozone as a result, but no down these issues will fade relatively quickly and crude oil prices continue their longer term upwards bullish momentum in due course. My own view is that $100 per barrel still remains a realistic target but before this can be achieved there is substantial price resistance to overcome on the way back up.
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