Crude Oil Prices December 14, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude markets try to rally during the session on Thursday, but failed as the 80 $80.00 level offered far too much resistance. This market originally would have gotten a boost from the Federal Reserve and its extension of the quantitative easing policies that we’ve seen over the last couple of years, but it appears that the markets are taking this more negatively than previous times that the Federal Reserve has stepped in and pump the markets full of liquidity.

This may be because the markets are focused more on the so-called “fiscal cliff” at the moment, and the Federal Reserve moving in that direction was a huge surprise. The candle for the day looks very bearish as it is a shooting star at the bottom of the fall, and it does look like we’re going to attempt to break down below the $86 level again. With this being said, we feel that this market will continue to grind sideways with a downward bias, until it eventually breaks through the $84.00 level which would signal math selling.

Brent

The bread markets had a very similar session on Thursday as the market trying to break above the $109.00 level, only to be rejected and sent back down to the $106.70 area. This market currently sits above a fairly significant support zone between $105.00 and $106.00, so we are hesitant to start shorting here. However, we do see that this market is more bearish than bullish, and as such will sell rallies as they come. Also, if we managed to break down below the $105.00 level, we are more than willing to go short at that point time.

This market will always be subject to headline risks coming out of the Middle East, so that of course can always play havoc with your trade, however, we do think that the demand equation as such that this market should continue to grind lower over the next couple of months. If that’s the case, we want to start shorting heavily at $105.00, or fade any rally that shows any signs of weakness going forward.