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The black gold is suffering

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02/26/2013 | 09:02 am
Opinion : Check out the trading range breakout 90 / 100 
The U.S. WTI crude barrel was gradually approaching its highs since September 2012 to 100 dollars when the Fed brought an end to this bullish trend. Investors were, indeed, reassured in this beginning of year by the future global outlook less alarming than expected, following a series of good macroeconomics publications, particularly in the U.S. and especially in China where growth is gradually regaining a second wind. The Fed has since been there… destabilizing short-term investors.

The last minutes of the Fed have, indeed, implied that it was thinking about a possible end of the quantitative easing. The U.S. Federal Reserve may need to slow the acquisition of assets, or even stop them, before the employments goals are achieved. This new uncertainty has, logically, prompted investors to be more cautious and crude oil prices have directly been penalized as all raw materials because of a rise in the dollar.

Meanwhile, the crude barrel was, last week, in turmoil because of persisting rumors about massive sales by a hedge fund, which is forced to liquidate its long positions because of new uncertainties related to the future policy of the Fed. Brokers will be, consequently, very attentive to the futures words of Ben Bernanke, president of the Fed, who is going to talk, Tuesday and Wednesday, about the country’s monetary policy.

The next decisions of the Fed, during this year 2013, will be followed by many people. However, WTI’s prices will continue to be faced to macroeconomics publications, to geopolitical risks and naturally to weekly publications of the U.S. crude inventories.

Technically, the situation is now neutral in weekly data between 90 and 100 dollars, threshold corresponding to the 20-week moving average. Oil prices will be influenced, at the same time, by the recent uncertainties because of the Fed, and the comeback towards risky assets observed at the beginning of the year.
In the short term, we will wait for the exit of the 90-100 dollars trading range in weekly close to take a position. A breakdown of the 90 dollars threshold would lead prices towards the 80 dollars. In contrast, exceeding the 100 dollars could renew the bullish trend of the crude oil towards the 110 dollars, upper limit of the mid-term trading range. We can play the exit of that range thanks to the Crude Oil Future (Code : CLXXXX) on the Nymex futures market.
Rodolphe Steffan
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