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Daily Oil Prices 29 May 2012

Oil Chart

WTI Oil Chart 29 May 2012

Following the recent sharp sell off in oil  which has seen the WTI contract fall from a high of $110 per barrel to $91 per barrel at time of writing, it will be interesting to see whether OPEC, and in particular Saudi Arabia, are willing to tolerate a further drop in price given that the Kingdom’s target price is now firmly at $90 per barrel.  Until recently Saudi Arabia’s target price for oil was $74 per barrel.

From a technical perspective both the daily and weekly charts for the WTI are still heavily bearish with the weekly chart, in particular, indicating price support at the $75 per barrel price points.  A case of convergence of the fundamental and technical picture for oil.  We can also expect to see further pressure to the downside with Chinese demand falling as her economy begins to slow.  China is currently the world’s second largest importer of oil.

In the short term our Hawkeye indictors are confirming further bearish moves for the WTI to $90, before moving to re-test earlier support at $85 last seen in May 2010.

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