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December Crude Oil futures are set to finish the week over 8.00% lower if the pace of the current selling pressure continues into Friday’s close. Last week, the market was pressing its high for the week and a key 50% retracement level. This week it’s pressuring its low for the week and another short-term 50% level.
Just like last week, trader momentum will determine whether the market makes a successful test of the retracement area, or trades through it, making $51.42 a new secondary lower top.
Two factors have been supportive for crude oil recently. One is the gradual drop in the rig count as reported by driller Baker Hughes. The other is Russia’s involvement in the war in Syria. This week, however, traders are acting as if these two have become non-events.
Last week, short-sellers were being flushed out of the market because they felt that perhaps Russia could gain influence in the Middle East and convince OPEC to cut production. This week’s price action suggests that last week’s rally was simply an overreaction to the fresh news.
The week started with crude oil under pressure after OPEC’s monthly report said the group pumped 31.57 million bpd in September, up 110,000 bpd from August and almost 2 million bpd more than its demand prediction for this year.
OPEC also forecast that demand for its oil in 2016 would be much higher than previously thought as its strategy of letting…