Crude Oil Price Analysis – Crude Continues to React to Headlines

Crude Oil Technical Analysis

The light sweet crude oil market has gapped lower during the open on Tuesday, but has turned around to at least show some resiliency. This is an interesting move because, quite frankly, I think this is a market that will more likely end up being more of a headache than not because it is moving on the latest headlines.

The idea that the G7 countries are going to release the reserves that they have of crude oil to help alleviate the problems is part of what is knocking this down. But, quite frankly, we just got to the point where I think there was nobody left to buy. At this point I still think it is a buy on the dip type of situation. I just don’t see why you would short this market. If the market did fall, the $78.50 level should end up being the floor. Right now, though, this is a great place to lose money as people found out yesterday buying oil at $117.

Brent Technical Analysis

Brent markets look very much the same during the trading session, as we gapped lower, and we’ve been all over the place.

The $85 level in this market is likely to be the floor that people will use. To the upside, the $98.50 level is an area that I think a lot of people will be looking at as potential resistance as it is the top of the gap. Brent is probably a lot more sensitive to the shocks in the Middle East than light sweet crude.

Really at this point in time, I think you’ve got a situation where traders continue to buy dips. I don’t necessarily think, though, that this is a market that even if it does fall, you should be shorting. It is a very dangerous place to be right now. Your position size must be small if you feel, for whatever reason, you need to press buttons on this chart. The oil markets are going to be moving on the latest random headline coming out of the Middle East, and that is the hard, cold, and very dangerous truth of this market.