Crude Oil Forecast October 31, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market fell during the session as you can see on Thursday, as we continue to hang about in obvious consolidation. The $80 level below of course is supportive, and as a result we feel that the market will continue to attract buyers in this general vicinity. The market is one that can only be traded by short-term traders at this point, because there is simply not enough room to move at this point. The downside certainly is protected, as the $80 level is not only supportive, but it is also a large, round, psychologically significant number. Beyond that, we see the $84 level as very resistive, so really at this point in time it’s difficult to trade this market for anything other than a very short-term move.

Brent

The Brent market also fell, but remains in what we think could be ultimately determines to be a bearish flag. We also recognize the fact that the $90 level above needs to be broken to the upside before you can even consider buying this market, which at that point in time the market could go as high as $97. However, we think that the market will find much more natural support closer to the $80 handle, which is a large, round, psychologically significant number. Until that happens, we believe that the buyers will more than likely stay away from this market, and the fact that the US dollar continues to strengthen overall certainly adds credence to the idea of this market continuing to fall.

On top of that, demand is fairly weak and it comes to energy overall, so we have no interest in buying this market in general. Any buying opportunity as we see in the near term will be short-term at best, as the trend is most certainly to the downside and we don’t see that changing anytime soon. The energy markets are continuing the bearish pressure that we have seen for some time, and we are not willing to bet against it for any significant amount of time, but we also realize that demand continues to be very light, and that of course will ultimately work against this market also. At $80, we would have to reconsider everything.