The market looks very bleak as the important $73.14 level failed to hold yesterday. I noticed that we are looking back into 2006 for our third support level which puts this fall from July into perspective. The market obviously looks like a correction is in order and I’m sure all the technical indicators are showing the market to be oversold but it is dangerous to trade against the trend, especially a powerful one such as this. The short and medium term trends are bearish while the long term trend is sideways.
- Support: $68.14 (low of 21/08/07) Resistance: $78.05 (9 day moving average)
- Support: $66.80 (low of 31/05/07) Resistance: $75.04 (yesterday’s high)
- Support: $64.92 (high of 01/12/06) Resistance: $73.14 (low of 10/10/08)
Summary:
The freefall continues with growing stocks and falling demand joining forces with further economic weakness to heap pressure and keep this downtrend running at full pace. As traders watch the spreading of the world financial woes to emerging economies such as China the prospect of a recovery in demand looks distant and we will expect any corrective rally to be sold. The weekly DOE stats are due out today, one day late due to Monday’s Columbus Day holiday and it will be interesting to see whether the short term supply/demand situation will have any influence on the bigger picture.
DOE Stock Estimates (Change in millions of barrels)
Crude +2.2 Gasoline +2.9 Distillate +0.4
