Crude Oil Prices December 12, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude markets went back and forth during the session on Tuesday, but finished relatively flat as the market gained just $0.45 a barrel. We did have a fairly decent wide range for the trading session, but the fact that we could make any decisive move is partly due to the fact that we are sitting just above a significant support level, and the fact that today sees the end of the FMOC meeting that could signal further quantitative easing out of the Federal Reserve.

If the Federal Reserve decides to expand its quantitative easing policy, I feel that the oil markets will get a nice bounce off of that, probably up to the $90.00 level in the short-term. However, one would have to wonder whether or not the lack of demand would weigh upon the market at that point, and send it back down. Alternately, we could get a “nonevent” and see oil prices continue to try and break down below the $84.00 level. Regardless, over the longer-term it looks like light sweet crude will struggle to hold onto any gains.

Brent

The bread markets had a slightly positive session as we gained roughly $0.60 for the day. Much like the light sweet crude market, this commodity went back and forth only to post a modest move for the session.

However, this market is currently sitting just above a significant support zone, and as such it may have more trouble falling than the light sweet crude market. The $105.00 level continues to be very supportive, so this level will have to be broken on a daily close of this point to continue selling. If we do get a bounce from here, we believe that any signs of weakness should be sold in this marketplace as gains will be difficult to hang onto in this current environment.

If we get quantitative easing of the Federal Reserve, this market should continue higher, and will more than likely challenge the $112.00 level. However, it is difficult to believe that with the lack of demand presently around the world that this market will continue much higher than that. Because of this, we would be selling rallies at this point.