Light Sweet Crude
The light sweet crude market bounced rather significantly during the course of the session on Wednesday, as the $30 level caused a bit of buying. On top of that, there have been rumors that the Russians are willing to meet the OPEC coalition, but at the end of the day it will be difficult to get all of these players to agree to cut oil production. Because of this, I believe that rallies at this point in time should be selling opportunities as the markets will continue to be very bearish overall. Ultimately, there is no way to buy this market as the trend is so far from changing to the upside, and would have to break above $40 to even look like it’s going to. Exhaustive candles will be used on short-term charts in order to take advantage and start shorting again.
Brent markets rallied a bit off of the $32 level, and with that it seems like the market is trying to find sellers at higher levels. Again, Brent probably bounced for not only the OPEC meetings potentially happen, but the fact that the US dollar fell rather significantly during the course of the session as well. Again though, we don’t really think that this market changes trends until we get above the $40 level, so at this point in time we are simply waiting to see signs of exhaustion or failure in order to start shorting this market yet again. After all, this is a market that has been in a downtrend for a very long time, and for a good reason.Remember, the supply out there is far too strong for the demand, and as a result there’s really no way to think that this market is going to turn around anytime soon. The idea that OPEC and the Russians can come together to cut production is pretty far out there, and having said that this should be a rally that can be faded fairly soon, it’s just a matter of letting the market tell you when to do so.