The last few days have been interesting ones for crude oil (USO, quote) traders, with the commodity mirroring the volatile price action and associated volume profiles of related markets, and suggesting in turn, that we may be approaching a pause, and possible bottom to the current bearish trend.
Let me start this analysis for oil, by highlighting an issue which I always find deeply ironic which is this – when oil prices rise quickly, a hue and cry results with the ‘evil’ speculators blamed who quickly become public enemy number one.
Oil prices continue to remain heavily bearish on the daily chart following the initial failure at the $106 per barrel area in early July which was the tipping point for the commodity, with the final phase of this particular price action, clearly marked with a shooting star candle and pivot high, coupled with high volume, and confirming the weakness at this level.
Oil prices continued to move firmly lower once again in yesterday’s oil trading session with the WTI futures contract for August closing at $102.29 per barrel, and ending with a wide spread down candle as the commodity lost over a dollar per barrel on the day.
Oil continues to find it hard work, building on the bullish breakout of mid June, having moved into a sustained phase of price congestion over the last few weeks, as it continues to slide lower ahead of today’s oil inventories report.
Oil appears to have run out out of steam once again, following the bullish rally during May, with $104 per barrel once again proving to be a major stumbling block, and as shown on the daily chart with the yellow dotted line.
Brent crude oil (BNO, quote) looked poised to end the week with its largest weekly decline in four months.
If any further evidence were needed of the bearish sentiment towards oil, yesterday’s price action confirmed this weakness once more, as the commodity attempted to rise in early trading, before selling off sharply later in the oil trading session, with the June WTI futures contract closing at 101.28 per barrel, having hit an intra day high of $102.20 per barrel.
Whilst commodities such as nickel and coffee have been offering longer term investors excellent returns this year, and with soybeans set to join the party with some good rollover returns, crude oil has promised much but delivered little.
WTI Crude Oil (USO, quote) prices moved slightly higher during overnight trading in Asia. Volume remains light as we approach the U.S. first trading of the week with New Zealand and Australia closed for holiday.
