Crude Oil Prices for the week of December 10, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude markets fell over the last five sessions in order to break down below the $86.00 level. Because of this, we see this market as picking up steam to the downside, but we have not broken significant support yet. We see the significant support at the $85.00 level, and as a result we do not see a long-term trade set up quite yet.

However, if we managed to close below the $85.00 level on a daily chart, that would be enough to get us to start selling and aiming for the $80.00 level. However, we think the $80.00 level will be significant support, and we could see a bounce from that level. If we do get below that area, this market could continue much, much lower.

Brent

The Brent markets had a horrible week over the last five sessions as we had originally try to break above the $112.00 level, but failed and plunged all the way down to the $107.00 level. This market looks absolutely horrible, and we believe that the next support level will show itself at the $105.00 level, but could very well give way.

If that happens, we think that the $100.00 level will be attempted and possibly even lower. The demand for crude oil right now is somewhat tepid, and as a result we think that lower is the way to go overall. However, we of course will be concerned about headline risks and headline shocks, especially coming from the Middle East.

With the various areas of tension in that region, a spike in this commodity wouldn’t be a surprise either based upon some type of headline coming out of a place like Syria or Egypt. Nonetheless, if we can ever get back to the fundamentals, we have much more oil at the moment than we need, and simple supply and demand should dictate lower prices going forward. We also believe that selling rallies will be the way to go in this marketplace as well, as we see the $112.00 level as massively resistive at the moment. We have also made several lower highs, and that cannot be ignored either.