By FXEmpire.com
The Light Sweet Crude markets continued to fall during the Thursday session as the bearish outlook continues for the upcoming summer. The market is currently being hit by several factors at once. The US dollar is the first hurdle as it continues to gain on most currencies around the world, and the explosion of value in the Dollar tends to work against the value of commodities in times like this, and the oil markets is one of the most obvious places traders will flee.
The Iranian situation seems to have taken a backseat to the problems in Europe, and as such there is no “fear premium” in the crude markets now. This has lead to massive selling, and the fears that the European Union is going to implode will weigh upon the idea of buying riskier assets like oil.
The support level at the $90 opened the floodgates for the bears, and this market looks destined to hit $85, and then $80 in the near term. The market is without a doubt bearish as the month of May saw a roughly 20% drop in the value of this commodity. With a move like that, there can be no real doubt as to whether or not the fall is “real” at this point. Because of this, we have to sell only in this market as buying is far too risky.
The market has been falling rapidly, so a bounce could be coming, but it is obvious by now that these bounces will simply be selling opportunities in the near term. Because of the uncertainty in Europe and the unexpected build in Crude Oil inventories in America, the oil markets should continue to be bearish going forward. There is massive support at the $80 level, and it is likely that if the markets get down to that level there is a real chance that OPEC will start to implement controls.
We sell rallies at this point, and sell fresh new lows as well. Buying isn’t possible in the mean time, as the economic situation is far too bearish in general to risk capital in a market like oil.
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Originally posted here
