Crude Oil Prices December 4, 2012, Technical Analysis

Brent

The bread markets fell slightly at the open, but managed to bounce a bit during the session on Monday, as the $110 level continues to offer significant support. This market looks like it’s currently consolidating with an upward bias and a move above the $112 level would in fact signal a breakout to the upside.

The Brent market seems to be a bit more sensitive to the headlines coming out of the Middle East, so any kind of provocative action in that region could of course move prices higher. The spread between Brent and light sweet crude is still fairly wide, so we feel that the “biggest bang for the buck” is going to be with going long this market. However, we need to see that move above $112 a barrel first.

Light Sweet Crude

The light sweet crude markets had a very benign session as we initially tried to push above the 90 handle, only to fall back and close under the $89 level. This suggests weakness going forward, and certainly gives credence to our assessment that the $90.00 level was going to be the beginning of significant resistance going higher. In fact, we see this as being resistive all the way to the $92.00 level at the very least, and quite frankly can see quite a bit of resistance going as high as $94.

With this in mind, we are still bearish of the light sweet crude market, and will continue to sell rallies to show any forms of weakness. In fact, we think that this slow healthy grind higher has been met with massive resistance, and the only thing that we see on the horizon that could push prices higher is some type of announcement of further easing by the Federal Reserve next week. Until that happens, we do not see this market be able to hang onto gains for any great length of time. We are selling hammers, bearish candles, and quite frankly would even sell a break of the lows from the Monday session as we simply Saul far too much weakness.