How low will crude oil prices go; unload your oil stocks? (The Star) HOW low can it go? The obvious answer is, no one knows. If you think the bears still have a grip on oil, then you should continue to unload, grab the money and sit on the sidelines waiting for the next entry at cheaper levels. ----------------- Profit.at.Bursa ----------------- On the other end of the spectrum, if the so-called bear run has completed its course and makes a u-turn heading north again, then one should buy at current levels and buy more. Light sweet crude, also known as the West Texas Intermediate and traded on the New York Mercantile Exchange (Nymex), started the downward spiral at the US$107.73 level on June 20, owing to an apparent profit-taking activity. What appeared to be a typical correction process then subsequently turned sour, as news about soft demand and oversupply dampened sentiment. Thereafter, the overall market condition deteriorated further, dragged down by the Organisation of the Petroleum Exporting Countries cartel’s decision against production cuts to arrest the issue, which witnessed crude oil prices closing at a four-year low of US$66.15 per barrel the previous Friday on Nymex. Against the negative backdrop, the black commodity continued to bleed in Asia, trading on extended liquidation pressure yesterday. Evidently, the prevailing trend is overwhelmingly bearish, with prices flirting sharply below the lowest 14-day simple moving average line and the multiple “death crosses” on radar screens staying intact. For now, there is really no positive news moving the market, apparently, but people reacting to all sorts of negative headlines that the norm for oil is “downward pressure”. Under such circumstances, any rebound due to the grossly oversold reason is not sustainable, only creating an opportunity for bearish investors to sell into strength, unless a clear positive catalyst emerges. Based on the daily chart, crude oil prices had violated the default measurement of 23.6%, 38.2% and the 50% of the Fibonacci retracement and are now approaching the 61.8% pullback of the previous bull rally, from US$32.40 on Dec 19, 2008, to US$114.83 on May 2, 2011. The 61.8% retracement of the previous bull rally is set at the US$63.89 level, and usually, prices would find a shelter here, as it is viewed as an enticing level for investors to nibble technically. However, if there still is no rebound in sight at this level and crude oil stages another breakdown from the US$63.89 level due to persistent liquidation, then a full retracement back to the US$32.40 level on bearish extended-mode would be on the cards. ----------------- Profit.at.Bursa ----------------- | #saham | #oilandgas | #OnG |
Posted on: Tue, 02 Dec 2014 12:39:11 +0000