• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 4 hours Will Uncle Sam Step Up and Cut Production
  • 56 mins In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 7 mins Long Range Attack On Saudi Oil Field Ends War On Yemen
  • 10 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 10 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 1 hour * 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on terrorism, wars, lopping off heads * Too late now
  • 4 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 15 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 10 hours Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.
  • 23 hours Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 23 hours Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 13 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 5 hours US Petroleum Demand Strongest Since 2007
Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

More Info

Oil Market Forecast & Review 27th September 2013

Speculators continued to dump crude oil last week. The last of the longs finally realized that an attack on Syria by the U.S. was not going to happen. This shifted the focus on the U.S. economy which by all accounts is sputtering at best according to the Fed.

On September 18, the U.S. Federal Reserve announced it was not going to begin tapering its monthly $85 billion monetary stimulus. The event triggered a drop in interest rates and a subsequent decline in the U.S. Dollar. Since crude oil is dollar-denominated, theoretically, crude oil should have rallied because of an expected jump in foreign demand. Although the initial reaction by traders was to the upside, the market quickly ran out of buyers, leading to last week’s sell-off.

Besides being overpriced because of excessive speculative buying, investors may be realizing that the anemic pace of the U.S. economic recovery, despite the billions of dollars being supplied by the Fed, is likely to continue over the near-term. This may actually lead to a drop in domestic demand which should keep inventory at historically high levels. Rising supply should keep the downside pressure on the market which means prices are likely to drop below the psychological $100.00 level over the near-term.

The technical picture on the weekly chart actually supports this notion. Based on the June 3 bottom at $91.22 to the August 28 top at $111.34, the market seems poised for a test of the retracement zone at $101.28 to $98.90.

Oil Market Forecast

Last week, the market plunged after a Fibonacci level at $104.82 failed. The led to an almost immediate test of a minor uptrending angle at $102.80 this week. A close below this level the week-ending September 27 should put the market in a position to challenge a 50% level at $101.28 and a main bottom on the weekly chart at $100.80. A break though this level will turn the main trend to down on the weekly chart and could trigger an acceleration to the downside.

The downside momentum is likely to continue as long as the downtrending resistance at $101.34 holds as resistance. This could set up a further decline into uptrending support at $99.72 or the Fibonacci level at $98.90.

Barring any surprise developments in the Middle East, look for the selling pressure to continue this week. The market may accelerate to the downside if Congress cannot reach a budget decision by October 1. This could mean a partial shutdown of the government which will not be good for the economy. Investors are likely to shed risky assets on this news, weakening crude oil even further.




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play