Technicals favour a lower price on the weekly:
- Major resistance at around 63
- at the upper band of the BB
- : Commercials are extremely short
- Seasonality: Weakness into Feb due to reduced demand for heating oil . The extreme cold right now my override this
In favour for bull:
- continous draw down of crude stocks, which is already considerable lower than this year around
- cold weather to continue
- ongoing violence in Iran
Recommendation: wait if we brake out or retreat in the net days. Friday will probably show that already
- Latest weekly inventory report showed a big 7.4 million barrel draw of crude stocks, which should be supportive of CL
- Iranian situation still unresolved, supportive for CL
- Saudi Aramco has further reduced the price of Arab crude. This probably accounts for the price decline today
price backed up from key resistance
- Right now favouring the bear case, but not with very high odds
- sold a small position of CLJ8C70 @ 0.14
CL quite convincingly over resistance at 63.
Net resistance may be about 66, but it is weak.
Market is overbought. Thus a decline in the next days is possible.
I will wait until next week before cutting my short. My entry was too early.
The question is if that is just a short correction or a trend change.
If the rig count increases further in the coming weeks it may be a change to a downtrend.
We will see in the coming weeks.