Light Sweet Crude
The CL contract fell hard today, as traders as selling everything they can in a panic response to the events in Japan. Never mind the fact that demand for crude has remained the same, or that the Middle East still sees protests going on, people sell in times like these.
The truth is that the CL is lining up to give us great buying opportunities. As you can see from the charts, the support area at $100 has given way, but there is an even stronger one at $95/barrel. Knowing this, it is probably wise to wait and see what kind of reaction we get at that level before buying.
A break below finds $90 as support and below that would constitute a serious bear move. However, the fundamental drivers for this commodity haven’t changed at all. On the support levels you should see buying. In the meantime, it’s best to sit and wait.
Brent
Brent did the same thing in today’s trading. $112.50 gave way, and now the sellers are aiming for the $107.50 – $105 level. It should be noted that $105 is much stronger than the top of that area as a daily trend line intersects at roughly the $105 level. Tomorrow will probably see more weakness, and could see us retesting the support area mentioned above.
The only way this could be a sell is if we break the $105 area, and at that point you have to wonder if a trend change is in order.
More March 16, 2011 Analysis:
