Crude Oil forecast for the week of July 25, 2016, Technical Analysis

WTI Crude Oil

The West Texas Intermediate crude oil markets fell during the course of the week, and it does look like we are starting to roll over in general. At this point, I believe that we are going to test the $42 level below, and then break down below there to continue to the downside. Oil has seen to have peaked, and the downtrend continues based upon several different factors. The US dollar strengthening of course is one of the major reasons, but we also have a serious lack of economic growth around the world, so that of course will hurt the value of crude oil going forward as demand will fall. We had previously seen disruptions in Canada, which has a direct effect on this market, but the supply is back online and we should now continue to see bearish pressure.

 

Brent

The Brent market fell during the course of the week as well, and it now looks like we are going to try to break down below the $45 level. With this, a break down below there the market could continue to go much lower, and as a result short-term rallies could offer selling opportunities going forward. There is a large downtrend line, and I believe that we do continue to go lower. Nigerian supply disruption has been put back online, so having said that it’s likely that the supply will continue to increase, and as a result I think that praising should continue to ease. I’m not looking for any type of massive meltdown, just simply grind lower over the longer term.

It is not until we break above the top of the downtrend line that I would consider buying this contract at the moment. I feel the same way about the WTI market as well, as they both look to be softening going forward. Given enough time, the two markets do eventually follow each other, and I believe that we will see a general decline in both going forward and rallies should offer selling opportunities.