Crude Oil Forecast December 18, 2012, Technical Analysis
Light Sweet Crude
The light sweet crude markets saw a relatively bullish session during Monday, as they gained 0.77% during trading hours. The market still looks like it’s ready to consolidate, and as such it appears that we are going to tread water between the $86 and $90 levels. With that being said, we feel that there may be another day or two of bullishness left in this rally, and we will begin selling the closer we get to $90. We will wait for the daily close, and sell the first one that looks like weakness is coming back into the marketplace.
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Right now, the US dollar will be a driver of this market as well. So even though the supply and demand equation is out of whack right now, we have to pay attention to what’s happening to the Dollar overall as well. If oil is to break out above the resistance, it will do so because of a weak US dollar. Overall though, we are looking for rallies to sell the show signs of weakness closer to the $90 level.
Brent
The Brent markets fell slightly during the session on Monday, as they continue to underperform the light sweet crude market. However, we are seeing continued support just above the $106 level, and as such we think we are simply consolidating overall going into the end of the year. We would expect a range of roughly $105 to the $112 level.
There of course can be headline shocks out there that can break the market in one direction or the other, but truthfully we are getting towards one of the lowest volume periods of the year, and as such many traders will simply not be bothered to put risk on in the near-term. Because of this, we are going to treat this as more or less a short-term trading opportunity and by this market as we approach $106, and sell it on signs of weakness, especially closer to the $112 level. In between, we see the $110 level as a likely candidate for resistance that could send the market lower as well.