Daily Oil Prices Chart 26 Aug 2009
Another interesting day for crude oil trading, as the oil trading session ended with a wide spread down bar reversing at a stroke the gains in crude oil prices of the last few days. Reasons for this reversal (in the absence of the usual suspects – US Dollar & equity market which should have been supportive of crude oil prices) include the possibility that today’s oil stats will be very bearish and that daily oil prices have simply become “over extended”. However, I should like to suggest that it is more likely to be ETFs and Exchange Traded Note funds which have been pouring money into the oil market now limiting and liquidating their positions in advance of possible new regulations from the CFTC. According to reports in the FT when funds such Deutsche’s Crude Oil Double Long ETN stops issuing new shares because of “current and anticipated new regulatory restrictions and limitations” it is time for oil traders have to take note. From a technical perspective whilst yesterday’s candle is bearish engulfing, it should be noted that technically the close of the day found support from both the 9 day and 14 day moving averages, and coupled with the strong support level now lying immediately below, this should provide the necessary platform for a reversal in due course from this temporary set back. It is interesting to note that since early July we have seem a series of higher highs and higher lows, indicative of a bullish trend higher, and one where the oil trading channel is well defined. Today’s down bar may well be defining this level once again, and provided the support level in the $71 price region holds, then we may well see a bounce higher in oil prices in due course. Should this level be breached however, then this could signal the end of the latest rally and a return to the bearish sentiment of late June. The oil market, of course, like many others is suffering with thin trading volumes ( in oil futures) and a lack of significant news, coupled with the long summer recess, all of which are impacting prices and with extreme and volatile price moves as a result, of which yesterday was one example. As we move forward into September these volatile days should diminish as we establish once again a more orderly pattern and flow to trading the oil markets. Overall the WTI oil contract ended the day at $72.05 per barrel having at one point touched an intra day high of $75.oo per barrel
WTI Oil Contract Support & Resistance:
S: 72.88 R: 75.00
S:68.71 R: 70.70
S:59.25 R:65.25
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