Crude Oil Market

Oil prices have declined strongly this week and are likely to end the week with the second weekly decline in a row.  As of this writing, the near term NYMEX WTI contract is down by over $5/bbl for the week with the trading pattern looking like it is going to set into a $90 to $100/bbl trading range. Barring any new geopolitical risks, it does not appear WTI will breach the $100/bbl level.  On the other hand, unless the macroeconomic data out of China and the U.S. take a turn for the worse, we are not likely to see oil prices dropping below the $90/bbl market.  The Brent/WTI price spread has also been range bound throughout the sell-off over the last two weeks.  With new weather issues in the North Sea, it does not look like the price spread is going to tighten much over the short term.

Although WTI is still trading above the key technical support level of the mid- $94’s/bbl the market has completely broken down as it did breach this level yesterday. I am not sure whether or not prices are going to hold the $94/bbl level after yesterday’s strong sell-off.  As such I will maintain my view and bias at cautiously bearish for the short term.

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About JWM Energy Consultant
Professional Energy Consultant. I advise large energy-users on procurement strategies to reduce electricity and natural gas costs.

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