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Oil Market Forecast & Review 5th April 2013

By Editorial Dept | Fri, 05 April 2013 18:17 | 0

After posting a high last week at $97.80, May crude oil sold off sharply on the daily and weekly charts. The fundamental catalyst behind the move was an unexpected rise in weekly U.S. crude oil stocks.

According to the U.S. Energy Information Administration, crude oil stocks rose by 2.7 million barrels. This figure was nearly twice the expected level. The increase took inventories to 388.6 million barrels, the highest since July 1990.

Technically, the four-week rally found resistance on a downtrending Gann angle from the $99.10 top at $97.10 this week. The formation of a potential lower-top suggests that additional selling pressure could hit the market this week. Concerns about a slowdown in the economic recovery could be the driving force behind a break this week.

The nearest uptrending Gann angle support is at $94.78. This is followed by $92.28. Based on the short-term range of $89.78 to $97.80, a retracement zone target has formed at $93.79 to $92.84. A test of this zone this week could trigger a fast short-covering rally. A failure to hold this zone will indicate that the selling pressure is greater than the buying pressure at current price levels. The current set-up suggests that $92.84 to $92.28 is the next major support target zone.

According to the reportable positions as of March 26, small speculators continue to remain on the wrong side of the market. This recent report shows that long speculators increased their positions by 14,062…

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