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Daily oil prices – 16th November 2010

crude oil daily chart

Friday’s sharp sell off for crude oil on fears of rising inflation in China and a consequent interest rate rise, were duly quelled over the weekend as the Peoples Bank of China decided not to raise rates which had triggered the falls as rumours swept across the┬ácommodities┬ámarkets following strong Chinese fundamental data. Whilst inflation continues to remain a problem for the Chinese, these worries are likely to continue, and were seen once again yesterday, as the WTI crude oil contract closed marginally lower, ending with a narrow spread down candle with a shadow to the upper body, clearly indicating short term bearish sentiment, with oil closing at $84.52 per barrel. Whilst Friday’s close managed to find support from the 14 day moving average, this was not the case yesterday, with a close and hold below the 14 day moving average adding further to the bearish picture at present.

However, the longer term outlook for oil remains firmly bullish, and provided the strong platform of price support in the $84 per barrel area remains unbroken, then this should provide the springboard for a recovery and retest of the high of last week at $88.62 per barrel. The longer term moving averages continue to point to remain bullish, and once we see a break and hold above last week’s high, then we can expect to see daily oil prices pick up momentum once again, and move towards our medium term target of $100 per barrel and beyond in due course.