Look for Crude Oil to Retest the Forty Dollar Range

August 30, 2016 10:36AM CDT

October crude oil futures are setup for another run at the August low of $39.96. On August 19th there was a peak reversal and now the market is consolidating around $47.50 to $46.50. If the October contract can close below $46.40, then I think that would encourage a slide down to at $45.00 and quite likely all the way back to $40.00.

So that covers the technical setup that I see in the daily chart. The supply side fundamental remains bearish in my opinion. The supplies are still greater than the demand and we are also at a point where the demand for gasoline is easing.

Now let’s briefly discuss what has been supporting crude prices recently. The idea that OPEC will reach an agreement on production is just silly…in my opinion. All the members need the money, especially Iran! Perhaps there’s a possibility that an agreement to “freeze” production when they reach peak levels of production is attainable…but I doubt it. There will be no production restraints. The US Dollar strengthening is not going to support crude prices. The stocks are about ready to roll over too, and a correction in stocks will push crude futures lower.

Today’s action in the crude looks bearish, so far. If you would like to open a futures trading account, please give me a call.

 

Crude Light Daily

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