Crude Oil Forecast October 10, 2014, Technical Analysis

Light Sweet Crude

Light sweet crude market fell during the course of the day on Thursday, breaking below the $86.00 level. The market now looks as if it’s ready to continue going much lower, probably heading to the $85.00 level, and possibly even below there. However, the $85 handle of course is a large, round, psychologically significant number. The area of course should cause some type of bounce, but we believe that these bounces should offer nice selling opportunities going forward. In fact, we have absolutely no scenario in which we start buying the light sweet crude market, as it obviously looks so beat down.

With this, we have no interest whatsoever in going long and do think that this market will continue to be fairly weak over the longer term as well. We would have to see some type of supportive candle on a longer-term chart such as the weekly chart in order to start buying.

Brent

The Brent market as you can see fell during the course of the day on Thursday as well, testing the $90.00 level. The area of course is a large, round, psychologically significant number, and as a result a bounce from here wouldn’t be a huge surprise. However, if we close below that level on a daily chart, we would anticipate that this market would then go to the next large, round, psychologically significant number, the $85.00 level.

With that being the case, we feel that the market is one that you should probably step away from in the short-term, simply waiting for some type of bounce to sell or a break down to do the same with is exactly what we are anticipating being the best route to go forward.

Remember, and the Europeans tend to use more Brent than North Americans do, and as long as there are problems in Europe economically, demand will continue to be very light. With that, we feel that this market will continue to be one that can be sold time and time again. Buying is something that we don’t anticipate doing anytime soon.