As mentioned in yesterdays post the oil markets have failed to gain any momentum from this weeks bullish inventory figures. Yesterday saw a steep decline, to close at the lows of the day, regardless of a significant draw in inventories.
The theme of today’s trading has been selling pull backs, and keeping an eye on the bearish trend. As can be seen from the chart below, in general we have so far kept below VWAP, and never managed to get above the overnight highs.
To put the selloff into context on a longer time frame, below is the daily chart for crude, with today’s action just breaking through previous support at around $46.6 on the Brent Crude Oil chart (below). If you are trading futures, this level was around $44 on CLQ7.
Although we did break through resistance (blue horizontal line), at the time of writing we have pulled back just above it. So whilst this is a good opportunity to take profit, it is also an interesting time to see how the market deals with this resistance level.
If we can get below, and stay below that level, then we could see further declines of around $2, until the next major support level, and a re-test of June (and annual) lows.