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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Oil Market Fundamental & Technical Analysis – 26th September 2014

Weekly Crude Oil Analysis

The short-term picture for November crude oil futures turned a little rosier after prices consolidated for a third week. Some of the buying was related to profit-taking following the prolonged move down in price and time, some was fueled by geopolitical concerns, but most of the buying appears to be related to another drawdown in inventory.

Technical factors may have contributed to the profit-taking. Given the range created by the July 2012 bottom at $82.07 to the June 2014 top at $104.44, a major retracement zone has been created at $93.26 to .90.62. Although the market broke to $89.56 the week-ending September 12, most of the recent price action has taken place inside the retracement zone. This area appears to be attracting both profit-taking and aggressive counter-trend buying.

Earlier this week, a U.S.-led coalition began air strikes in key areas of Syria. Although the aggressive military action did not directly affect supply, enough counter-trend buying came in on the news to give crude oil futures a boost.

The inability to break the market lower this week suggests there may be enough speculative interest on the long side of the market to prop it up over the short-term. Keep in mind that these speculators tend to grow impatient if something to drive prices higher doesn’t occur quickly enough to help their cause. However, since this is an active geopolitical event, they may stick around long enough to see…

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