Crude Oil Price Outlook – Crude Oil Drops on Friday

WTI/CL Technical Analysis

The light sweet crude oil market has gapped lower to show signs of negativity and then fell even further, but then turned around to show signs of life. At this point, if we do get a little bit of a bounce, it makes a certain amount of sense because we got close to the $55 level, not quite down there, but close enough that we’re starting to run into that support. All things being equal, a short-term bounce shows an opportunity to start selling again.

Really, at this point, I think you’ve got a scenario where oil is telling you that the demand for oil is probably going to slip in. And of course, we do have a lot of oversupply of crude oil at the moment. So, with that being said, I think you still are looking to fade rallies at the first signs of failure.

Brent Technical Analysis

Brent markets look very much the same. We have tested the $60 area in the morning trading here in Europe and Asia, then We have bounced a little bit, and I would expect a little bit of a bounce. We might be a little overdone, but that bounce, more likely than not, will open up fresh selling yet again. This is a market that tends to be very technically driven. And of course, we have to worry about whether or not we have any real demand. And Brent will be especially interesting to watch because it tends to be not the U.S., it tends to be the rest of the world.

It does look to me like oversupply and lack of demand, perhaps the slowing down of the global economy, and economic transportation might be at play here. If we were to break down below the $58 level, oil should completely unravel. Rallies at this point in time, it’s really not until we break above $65 that we can even have a conversation that things might change.

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