Over the weekend, Vice President Dick Cheney visited with the oil minister Saudi Arabia in an attempt to discuss ways of stabilizing the oil market. This followed the first reported weekly lost in Crude Oil in last six trading weeks. Crude moved to the downside 6.35% to $101.84 from a record high of $111.88 a barrel.
The Saudi oil minister reaffirmed that they have kept promises to raise oil production and vowed to invest $10 of billions in oil infrastructure and new wells.
In today’s pre-market trading, these comments, demand worries, and the further strengthening of the dollar have put downward pressure on crude and the rest of the energy complex.
Moreover, Crude Oil on a technical basis has some downside weakness. All short-term technicals indicate hold/sell points. The long-term tells a different story altogether, it points toward much higher prices in crude. First, we have to retest the support level of $99.98 before moving forward. In my opinion, we bounce from those levels and move higher. However, if that support level is broken, we will trade to the 38% retracement level of $94.73 a barrel before moving higher.
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3 comments:
can you post some charts so that we can see what indicators you are talking about and what signals they are giving? Also, why is 99.8 an important level if it was already broken last week as prices dipped to about 99?
That is considered the fist support level; it was tested Thurs. and bounced off its lows convincingly. Due to the short interest and put volumes along with technicals, I think we need to retest that support level before moving higher. We did however; get close this morning, so that could constitute a retest. In my opinion the market is oversold and overall extremely bullish for Crude, Natural Gas, and RBOB in the long-term. I use the technicals only to highlight entry/exit points. The market economics (fundamentals) must be understood first-and-foremost. To put it frankly, you should only be long crude, using the techs to add to your net position.
Yes, I agree that long oil is definitely the way to go, especially if we are talking long term investment. You just have to be willing to not look at the price every 5 seconds and avoid panicking on a local dip. Historically, Oil has always rallied after a local dip and reached new highs. I doubt this trend will end anytime soon barring some kind of drastic shift in fundamentals.
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