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Possible pre-weekend short-covering today

Published Friday, August 1st, 2014

The weakness continued yesterday but maybe it is time for the bears to be careful, at least for today. The reason to say this is twofold. Firstly, apart from WTI, the rest has held important support levels. Secondly, and this is not strictly a technical approach, today is Friday and given the current geopolitical climate it could be risky to go home with short positions on. Anyway, WTI broke and closed below the 98.68 range support. It now has a valid downside objective in the form of the 96.43 range support, the daily low on May 5. This will remain a valid target unless the aforementioned 98.68 range is closed back over, in which case the 5 and 200-day M/As are expected to be tested early next week. They are at 99.82 and 99.86 respectively. Brent had a go at the 105.59 and at the 105.26/16 support levels. The former was even briefly broken but none of them were closed below. We shall have to see a close below the lower of them to turn unreservedly bearish. In the absence of such a move it is not unreasonable to expect a rally up to the 106.75/94 range, 200-day M/A and 5-day M/A resistance area. As for the products they all did their best to break and close below their relevant support levels and they all failed in doing so.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.