Crude Oil forecast for the week of October 13, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market initially tried to rally during the course of the week, but found the $91 level would be a bit too resistive, and therefore turned back around to sell off rather drastically. In fact, we even went below the $84 level at one point during the session on Friday, but found enough support to turn things back around. We ended up closing just above the $85 level which of course is somewhat significant, as the $85 handle of course is a large, round, psychologically significant number.

Ultimately, we think that the market is in serious trouble right now, and with the strengthening US dollar, it’s difficult to imagine that we are going to get much in the way of relief from the bearish pressure. We believe that the market is probably heading down to the $80 handle given enough time, and possibly even lower than that. Rallies at this point time should represent selling opportunities, as the marketplace is most certainly bearish overall.

 

Brent

The Brent markets also tried to rally initially during the week, but found the $93 level a bit too resistive. We turned back around and headed down to the $88 level where the buyers step back in and push the market higher. The market is currently just below the $90 handle, so we do feel that this market will go lower. It’s probably going to take some time, but eventually we expect this market to hit the $85 handle. Any rally at this point time should be treated with suspicion, and we would not hesitate to sell rallies at the first sign of resistance.

We believe that the value the US dollar will continue to work against the value of brands, just as the weakening economic conditions in Europe well. We believe ultimately this market could find buyers closer to the $85 handle, but in reality with concerns of a global slowdown, it’s likely that demand for crude oil in general is going to continue to be very weak.