Last week marked the first week in the last 4 weeks that oil did not make a new weekly high. The spread of the Canadian wildfires in Alberta threatens to cut one million barrels a day from the global supply.  The fear of supply disruption with the Canadian fires and political uncertainty in Libya was outweighed on Friday by the weaker than expected Jobs Report.  A weaker than expected jobs report has bearish implications on the demand for oil.  Friday saw the market rally on the report that the Canadian forest fire could affect as many a 500,000 acres.  However, that news was not enough to prevent oil from shaving off 2.7% from the previous week high.  Finally, the Baker Hughes rig report released on Friday indicated that the number active rigs in the U.S. fell for a 7th consecutive week.  The bottom line here is that as prices continue to climb, it will become more economical for U.S. producers to become more active.  If this is the case, then you can expect sentiment to shift back to concerns of oversupply.

As we begin to look into next week there are factors that will be affecting both sides of the market and we will be looking for the market to continue to consolidate.  Our expectation for next week is that choppy trading conditions with a bullish bias will prevail.

OTG CL Technical Outlook – Chart Analysis

Daily Chart

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The daily chart clearly show that the market has broken the bearish trend channel and has entered into a bullish trend channel.  Additionally, we are trading above the 100 and 200 SMA which is also bullish.  Finally, a little pressure was released this week on the slow stochastics and we are no longer overbought.  Overall Consensus is Bullish.

240 Minute Chart

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After breaking the bullish trend channel (RSI overbought) we began a new rally (RSI oversold) and have since continued to hold positive market structure.  The current status of the RSI (53.13) gives us room for a continued rally.  Finally, the 100 SMA has crossed above the 200 SMA and price action continues to trade above it.  Overall Consensus is Bullish.

60 Minute Chart

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It is on this smaller time frame chart that you can begin to see oil start the sideways rotation.  The 100 and 200 SMA’s have started to cris cross one another as price action has been rotating to the top and the bottom of the range for the past 3 weeks.  Overall Consensus is neutral to slight bullish.

OTG CL Technical Outlook – Weekly Price Targets

Above the Market

46.49 – 47.00

47.54 – 48.00

49.12 – 49.65

Below the Market

42.27 – 41.75

41.21 – 40.68

39.63 – 39.00