CW WEEKLY OIL REPORT 2/9
The market was unable to sustain gains last week as prices traded in a sideways choppy range between 4000 and 4200. The market dipped below 4000 several times throughout the week, but never produced a close below it, leaving trade in a congestion pattern for 2009.
Overall, the market appears to be in a fundamental battle between surplus inventories due to the economic slump and OPEC’s cuts beginning to work through the supply glut. Crude oil closed the week down $1.51 after Friday’s unemployment report showed its highest level since 1992 as nearly 600,000 jobs were lost in January.
The overall technical trend remains bearish with the weekly chart activity showing prices in a bear flagging pattern. Solid price action or multiple closes below the 4000 level is bearish on trade this week with an initial objective at the 2008 (H) contract low at 3800 down to the 3 week downtrend channel (3 W v TL CHNL) at 3700. Trade below 3700 encourages continued selling pressure towards 3500 with an overall target for the week at major annual support at 3320 to 3248, consisting of the 11 year uptrend line (11 Y ^ TL) and the 2008 spot low.
If the Bull camp continues to defend the 4000 level this week, trade will remain sideways with any upward pushes running into the weekly Resistance range at 4200-4300. Price action above 4300 will reinforce short term strength this week that would look to challenge last month’s breakdown area around 4500. Producing a close above 4500 at any point this week is expected to propel prices back into the major weekly Resistance zone from 4800-5000.
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