Daily crude oil prices declined yesterday crossing below the 14 and 40 day moving averages but later in the trading session managed to recoup a big part of the losses closing 57 cents lower for the day. The 9 day moving average, just above the chart “gap” should act as good support and a break of this level will point to a test of $39 followed by $36.85. In the last few days the chart indicated a swing around the moving averages which could point to a period of consolidation albeit within a very “choppy” range.
The short term trend is sideways while the medium and the long term trends are bearish.
WTI:
Support: $41.35 (14 day moving average) Resistance: $46.74 (high of 02/01/09)
Support: $40.40 (yesterday’s low) Resistance: $45.54 (high of 31/12/08)
Support: $39.65 (9 day moving average) Resistance: $45.08 (yesterday’s high)
OIL (BRENT):
Support: $43.40 (yesterday’s low) Resistance: $48.36 (high of 11/12/08)
Support: $42.85 (low of 21/01/09) Resistance: $47.20 (high of 15/01/09)
Support: $42.12 (low of 12/01/09) Resistance: $46.64 (yesterday’s high)
Summary:
A renewed sell off in the stock markets together with a slight strengthening in the US dollar were probably the drivers behind yesterday’s decline in crude oil prices. Another bearish feature was the EIA report showing bigger than expected builds in inventories which added to an already under pressure energy complex. Interestingly oil prices managed a comeback towards the end of the session which could suggest that potential significant increases in crude stocks in the short term will be somewhat restricted by the lack of spare storage capacity and that in turn acts as price support. Position squaring ahead of the weekend will give an added indication of forthcoming direction.
DOE Stock Figures (Change in millions of barrels)
Crude +6.1 (+0.4) Distillate +0.8 (-1.3) Gasoline +6.5 (+1.8)
