Crude Oil Forecast December 11, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude markets fell during the session on Monday, but had a relatively quiet day in general. We are currently under the $86.00 level, so it does look like we’re going to make an attempt to get down to the $84.00 level in the near-term. However, it really comes down to your time horizon: If you are an ultra short-term trader, you can go ahead and get short of this market as we should start to grind lower. However, if you choose to trade daily candles or something of that ilk, shorting on a break below the $84.00 level will be the way to go. At this point time, is going to be very difficult to buy light sweet crude as it appears to be heading towards the lows.

 

Brent

The Brent markets went back and forth during the session on Monday, but finished a bit lower at the $106.17 level. This isn’t quite low enough to break below the support area, but it does look like we are attempting to.

I still maintain that the $105.00 level is the area that the sellers will have to break down in order to gain momentum, and I do believe that eventually they will. However, a bounce could be coming in this general vicinity so of course we want to wait until a daily close below that level to be convinced of it. If they managed to do that, we think that a move down to $100 a barrel is very likely at that point time.

There will be numerous potential headline incidents coming out of the Middle East over the next few weeks, and this will have more of an effect on the Brent market than the light sweet crude one as much of the petroleum in that region is of the bread variety. Because of this, we think that the Brent market has more of a potential for an explosive upside move than many of the other grades of crude oil. However, as things stand right now we feel that oil in general will fall as demand starts to shrink.