By FXEmpire.com
The Light Sweet Crude markets rose slightly by the end of the Thursday session. The market has been under extreme pressure over the last couple of sessions, and the chart certainly reflects this. However, one cannot help but notice that the last couple of sessions have been an attempt to stabilize this market, and this is exactly something the bulls will to see.
The Middle East seems to have calmed a bit over the last couple of weeks, and this will have pulled some of the bid for crude out of the markets. Simply put, the world isn’t as worried about the Iranians blocking the Strait of Hormuz as it once was. This was thought to have put about a $10 premium in the oil markets by many analysts, and as a result we gave that much up.
However, there is the demand conversation as well. The demand is shrinking a bit, but there are places where is picking up the slack for the industrialized nations. The recent action certainly suggests that perhaps we are reaching equilibrium of sorts in this pair, and that the price of oil should be in this neighborhood.
Adding to the bullish case is the fact that many OPEC officials have stated that $100 is a comfortable price, and it is hard to believe they won’t get their way sooner or later. With this in mind, it is easy to think of oil rising $5 or $6.
The technical set up in this market suggests that a break of the $98 level would see the market run to $102 before running into massive resistance. The selling of this market cannot be done as far as we are concerned unless we get a daily close below the $95 handle. If we get that, there is a good chance we could see a significant move lower. However, on the margin we are much more comfortable with buying oil than selling it as there is always going to be headline risks out there, and let’s face it: they will more than likely be bullish.
Originally posted here
