Technical and fundamental factors weighed on crude oil late in the week, which could be signaling support has been pulled from the market. On Thursday, sellers overcame buyers at a key area on the daily chart and buyers also succumbed to another bearish inventory report.
Throughout February, April crude oil futures had been range bound, trading inside the 2015 range of $44.37 to $55.05. This futures contract spent much of the month hovering around while trying to establish support at its retracement zone at $49.71 to $48.45.
Buyers made two valiant attempts to breakout to the upside, but each move failed. The current sell-off was strong enough to take out the retracement zone and a pair of bottoms, signaling renewed selling pressure. The daily chart indicates there is room to the downside since the nearest support is the main bottom at $44.37.
Three questions will be answered at the start of the new month. The first will deal with the key retracement level at $48.45. If weak sell stops were triggered when this level failed then buyers are likely to show up to defend the market. This could create enough upside momentum to regain the support zone and re-establish some of the previous bullishness.
Secondly, the selling pressure through $48.45 could be strong enough to fuel a prolonged break into the main bottom at $44.37. This move will indicate that investors are seeking value. If the market breaks all the way back to within a dollar or…