Crude Oil Prices February 1, 2013, Technical Analysis

Light Sweet Crude

The light sweet crude markets fell during the session on Thursday, but got a significant enough bounce at the $97.00 level to form a hammer. This hammer suggests that we are continuing to go pressure on the $98.00 level, and that it should give way fairly soon. We still believe that this market will head to the $100.00 level in the relative near-term, and as a result still remain bullish.

You have to keep in mind though, today is nonfarm payroll day. Because of this, there could be extreme volatility in this marketplace once the announcement is made at 8:30 AM Eastern standard Time. If the announcement is good, it should be good for oil and vice versa. This is because the oil markets can be a bit of reflection upon the industrial complex, which of course is a large contributor to labor.

The shape of the candle suggests to us that a move above the $90.00 level should open the gateway to the $100.00 level, and possibly even beyond. If we get a knee-jerk reaction to the downside later today, we are more than willing to buy this market as it has support at several handles below.

The Brent markets had another positive session on Thursday as well, after initially dipping below the $114.50 level. As we close the market, we are seeing a print of $115.55, which of course is a fresh new high. With this being the case, and tensions rising in the Middle East, (after all, there was that whole explosion in the Iranian nuclear test facility) there is a real possibility that Brent sees significant strength over the next couple of months. However, technically looking at this chart we can see that it is a bit on the parabolic side.

We look at this market as a buying opportunity every time it pulls back. We think that as long as the Federal Reserve continues to weaken the US dollar, commodities in general should do okay over the long run. There are economic indications that things are getting better in several spots around the world, and while they are not getting rapidly better, we are seeing slow and steady growth that a lot of countries. This of course should be good for oil in general.