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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Oil Market Forecast & Review 1st March 2013

Last week it was mentioned that nearby crude oil was expected to complete a test of the retracement zone at $92.37 to $90.85 and likely stay in this zone until the fundamental traders could reassess the economic conditions. After initially testing the 50% level at $92.37, the market fell further into the zone to $91.92 before establishing short-term support on the daily chart.

Despite the sharp sell-off from $98.79, the main trend is up. Since the break from the top is holding inside the retracement zone, one has to conclude that crude oil is in a corrective mode. Typically, this type of break is triggered by uncertainty. Bullish traders tend to lose their focus and begin to search for excuses to pare positions. This usually means a short-term break into more attractive price levels.

Some of the fundamental reasons for the recent weakness are commercial hedging pressure, a sluggish economy, and lower demand for higher risk assets. One clue that the market was nearing a top was a shift to the short-side of the market by commercial traders according to the Commitment of Traders Report. This was followed by speculation that the economy was at a standstill because of persistent rumors about flat gross domestic production. Finally, turmoil in the Euro Zone and talk of ending the Fed’s bond-buying program drove investors into the safety of the U.S. Dollar.

All three of these factors were relevant to the weakness exhibited in the crude oil futures market throughout…




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
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