- The light sweet crude oil market has spent the bulk of November falling after having a jolt higher in October when sanctions against Russia were announced.
- The crude oil markets continue to see quite a few things work against them, not the least of which would be the fact that Russia, despite its sanctions, will still flood the market with crude oil.
- The Americans and OPEC are going to be doing the same. In this environment, it's very difficult for oil to truly take off, and therefore, I think you continue to have a pretty significant overhang.
Furthermore, this isn't exactly peak driving season, so that takes one of the major positive factors out of the market. And then after that, you have to worry about the fact that the global economy seems to be slowing down. If that is in fact going to be the case, then the demand for crude oil, of course, is going to slide right along with it. From a technical analysis perspective, I do see a massive floor at the $55 level, and if we were to break down below there, it would be like a trap door opening, and this market could really fall apart.
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Short-term rallies, I still think, offer nice selling opportunities. And if December plays out the way I think it will, December will probably end up being a situation where you're trading short-term charts, meaning daily or even hourly charts, and trying to fade signs of exhaustion after moving to the upside. I see the $60 level as a significant resistance barrier right along with the downtrend line of the last five or six weeks, and then the $62 level. It's worth noting that on the daily chart, the 50-day EMA is walking right along that trend line as well. I don't necessarily think oil is going to fall apart, but I am negative on oil at the moment because there's no real fundamental reason for the market to turn around.
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