Light Sweet Crude Oil and Brent Crude Oil
Oil continues to try to build a base. The light sweet crude oil market initially pulled back just a touch during the early hours here on Thursday but did turn around to show signs of life. That being said, I think a lot of people are going to continue to see more of a bounce and then fade the rally type of situation because the oil situation hasn’t changed.
We still have a lot more supply than we do demand. The $55 level remains the floor in the light sweet crude oil market, and I do think you need to pay close attention to that area. The 50-day EMA and the downtrend line both are hanging around the $58.50 level, and I think that’s your short-term ceiling.
Brent Technical Analysis
The Brent markets look structurally very much the same, although over here in this market, we have the $58.50 level offering a floor, and we have the downtrend line and 50-day EMA coming into the picture near the $62.25 level. This dynamic area could be a bit of a problem if you are bullish of this market.
Again, I think this is a situation where if the oil market rallies from here, people will start to sell into it. Massive oversupply is still a major problem here, especially in an environment where the economic picture is a bit mixed around the world. As a result, I think oil will continue to struggle a bit, at least until there is more growth in places like the EU and the US to absorb some of the production we are currently seeing.
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