Crude oil-further to fall?
Crude finally found some support yesterday, bringing to an end a five-session run of back-to-back losses. Just over a week ago, front-month WTI was closing in on $80.50, trading at its highest level since the beginning of May, and appearing to break out of a month-long trading range. But it then reversed sharply, and went on to fall 10% over the following week. Yesterday it managed to rally a touch. The question now is whether oil can rally back significantly from here, or if this simply represents a pause in a sell-off which has further to go. Front-month WTI is still trading well above the low hit in mid-December low of $68. Is that the target for short-sellers, or will they be happy to take profits at current levels? While the daily MACD indicates that the market is oversold, and therefore a bounce is possible, recent history suggests that prices can become even more oversold than they are now. It could be that the market requires even more of a downside flush before it finds firm support from which a robust rally can begin.
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