By FXEmpire.com

The Light Sweet Crude contract fell hard on Thursday as several different bearish factors came at once. The Nigerians have indicated that they are going to increase production to 4 million barrels per day by the end of the decade, and OPEC officials stated that they aren’t comfortable with prices being as high as they have been lately. In fact, they seemed to indicate that $100 a barrel is more in line with what they would like to see. The market sold off right away when the comments hit the wires.

The bearish action comes just one day before the Non-Farm Payroll release. This announcement will be vital to the markets in general going forward; as the Federal Reserve is known to have “additional tools” available if the economy needs more easing. Needless to say, if the number comes out weak, the market would interpret this as a strong signal that the Fed would have to ease again. This in turn would weaken the Dollar, and that in turn would strengthen the price of oil that has to be bought in those Dollars.

The situation in the Middle East has been fairly quiet lately, but the Iranians and Western Powers haven’t exactly agreed on anything, rather have simply pushed the problem back a little as they agreed to talk later. Well, having said this – later is soon now. Because of this, the talks that are scheduled for later this month could bring upon more posturing by the Iranians and this could make the markets nervous about supply – pushing prices higher.

The fall on Thursday is strong, but there is an obvious support level below down to the $100 level. This area has been important lately, so we aren’t willing to sell at this point. The market is bullish over the long term, and because of this we need to see an obvious break lower, such as a daily close below the $95 level. If the jobs number comes out rather strong, there is a real chance that we will see oil drift lower. If it is horrible, oil could spike. As a result, we are flat until we see the Friday close.

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Originally posted here