Crude Oil Forecast December 1, 2016, Technical Analysis

WTI Crude Oil

The WTI Crude Oil market rallied during the session on Wednesday, as it was reported that OPEC may have reached some type of cut in production. However, the market looks likely to run into quite a bit of trouble at the $49 level as we have already seen. This is the bottom of the uptrend line from the previous move higher, and as a result I would expect resistance there anyway. Also, the $49 level above is the beginning of resistance all the way to the psychologically important $50 handle. I think that given enough time, the sellers will return as we come to grips with the fact that OPEC is pretty much powerless at this point in time to take out the oversupply. The Iranians more than likely won’t be involved, the Iraqis almost certainly won’t, and then obviously you have the Americans and the Canadians it will pay no attention to this. In fact, the rising oil price in reaction to this only makes it more enticing for American and Canadian drillers to kick into high gear.

Brent

The Brent market rallied quite successfully during the day as well, slamming into the $51 level. This is also where the previous uptrend line finds itself crossing pass with the current pricing. On top of that, the $51 level begins a pretty significant amount of resistance all the way to the $53 handle. Because of this, I believe it’s only a matter time before the market pulls back after the over explicit noise above jumps back into the market. I’m not necessarily saying that the market can go higher, just that I am looking for the overreaction to be corrected. Ultimately, this is a market that has to deal with the fact that the US dollar strengthening and quite frankly the lack of demand that will continue to be a problem in this market. Sooner or later, cooler heads will prevail and the longer-term problems will come back into focus. Until then, I’m simply waiting for an opportunity to start selling.

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