Crude Oil Prices December 7, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude markets had a precipitous fall for the session on Thursday as market plunged below the $88.00 level, and extend the losses all the way down to roughly the $86.25 level. It appears that the “risk off” trade is starting to come into the oil markets, and with the Syrian Civil War looking like it’s winding down, this could remove one of the catalysts that have seen oil markets higher.

We still see the $84.00 level as a significant support level, so in order to get short of this market aggressively; we would have to see that level broken down on a daily close. Currently, we are bearish of this market but think that a bounce could be coming. A bounce that shows the slightest sign of weakness on the shorter-term charts will be sold by us.

Brent

The Brent market absolutely came undone during the session on Thursday as we broke down well below the $110.00 level, and managed close at the very bottom of the daily range. The close was roughly 106 $.80, and this suggests that we will continue lower and attempt to break down below the $106.00 support area. If we get below there, this suddenly becomes a market that we can aggressively short.

Brent is more affected by events in the Middle East than the light sweet crude market, and as such a winding down of the war in Syria could gain the carpeting out from underneath the feet of the buyers in this marketplace. There were fears that Iran would get involved in that conflict, and now that it’s obvious they won’t, this market has lost one of the biggest reasons for its bullishness.

Going forward, if we get a daily close below $106.00, we are more than willing to not only short this market but get aggressively short of it as well. We believe that breaking down below that level would send this market looking for the $100.00 level in relatively short order. As far as buying is concerned, if we see some type of supportive candle we could be convinced to do so, but it will be difficult to do so without some type of bullish headline out of the Middle East.