Light Sweet Crude rose initially during the session on Thursday as the bullish pressure looked set to continue into the day. However, as the afternoon part of the US session came into focus, the Western allies decided to put off a potential embargo on Iranian oil by six months. In other words, the West caved in. The failure of any backbone regarding the threats of punishing the Iranian nuclear program certainly will give the markets some relief in the short term. However, one has to wonder how long it will be before the Iranians butt heads with Europe and the United States again.
With that in mind, we can’t help but feel that the Iranians will certainly continue to factor into the headlines for the oil markets, but in the immediate future it looks like serious trouble has been averted. The ability for one nation to stand up to the rest of the world will certainly rear its head again in the future, and we will always have to pay attention to it.
The pair eventually fell, and even managed a sub-$100 close. This was our signal to sell at this point, and we feel this market will fall now. Certainly, there isn’t enough demand out there to justify the pricing, and with Iran on the back burner, the market should find some relief. However, it seems unlikely we will see a massive selloff, and we are expecting the $95 and certainly the $90 levels to provide support going forward.
The buying of this contract is almost impossible to do at this level, and the Friday session will more than likely produce more selling, provided nobody does anything stupid on the political front. (Not always guaranteed!) However, if we can break above the $105 level, we would be buyers on a daily close. A break below the session low for Thursday has us short of this market, but we are only looking for a $4 gain or so as the bulls will certainly find another reason to step in and support this market.
Oil Forecast January 13th, 2012, Technical Analysis
Originally posted here
