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Trading Oil Update – 16th September 2008

The downtrend continued with a vengeance yesterday and as suspected struggled to find any decent levels of support. I am continually looking further back along the chart to find potential areas where this market could historically hold. The downside technical target is now the low of 7th Feb @ $86.83. Markets rarely move consistently in one direction and after 9 consecutive days of making fresh lows a retracement back up toward yesterday’s highs cannot be ruled out. The short and medium term trends are bearish and the long term remains bullish.

  1. Support: $88.50 (low of 08/02/08) Resistance: $97.00 (yesterdays high)
  2. Support: $86.83 (low of 07/02/08) Resistance: $94.81 (low of 19/02/08)
  3. Support: $85.00 (low of 20/01/08) Resistance: $91.17 (yesterdays low)

As more substantial news filtered through yesterday regarding the lack of damage to infrastructure caused by hurricane Ike fresh sellers joined the bearish bandwagon. Once again potentially bullish news failed to have any significant effect after the announcement of a “shut in” in Nigeria exceeding 100,000 bbls a day. We feel the main driver was the knock on effect of the collapse of Lehman bank causing stock markets around the world to tumble. As we are all aware there is not always a positive correlation between equities and oil but in the current environment any issue that is likely to affect potential demand for energy is taken by the market very seriously.