Crude Oil Forecast November 12, 2015, Technical Analysis

Light Sweet Crude

The light sweet crude market initially rose during the course of the day on Wednesday, testing the $44 level for resistance. We turned back around to form a fairly negative candle though, and as a result fell towards the $43 handle. At this point in time, we are still above the support level at the $42.50 level, so having said that we are not ready to start selling quite yet. However, on a move below the $42.50 level on a daily close, we feel that the market then is able be sold. At that point in time, the market then will reach towards the $40 handle, which is a large, round, psychologically significant number and the site of pretty significant support back in late August. We also recognize that bounces from here could be selling opportunities, as long as we stay below the $45 handle.

Brent

Brent markets initially rose during the day on Wednesday, testing the $48 level. That area had recently been support, and it now looks to be resistance. Unlike the light sweet crude market, we have actually made a fresh new low here, and as a result it seems as if the Brent market is probably going to head down towards the $44 handle. With this, we believe the bearish pressure will continue and as a result the markets are “sell only” as far as we can see, and with that it makes sense we do continue to collapse as the Brent market is typically thought of as a European market, and of course the commodity is priced in US dollars. With the strengthening US dollar, it should continue to put pressure on this particular grade of oil.

The question then becomes whether or not we can break down below the $44 level, but at this point in time we have to assume that the support will hold. If it does break down, this opens the door for a move down to the $40 handle next. While we had consolidated for some time, it appears that the market has fallen apart a bit.