Crude Oil futures (symbol: CL) have traded in the $75-115/bbl range since Oct10. While that seems like a wide range, it actually reflects a degree of stability for this highly charged geopolitical commodity. The trading range also sits just above the widely-held estimates of reserve replacement costs in the $65-80/bbl range.
Crude oil is approaching a decision point. Breakout above the $114.83/bbl resistance level or again test the $77.28/bbl support level. Short term support currently lies in the $96-98/bbl range, based upon the trend line originating from the $77.28/bbl level in Jun12. See the chart below.
Stochastics suggest Crude Oil is approaching overbought. Volatility and volume have moderated over the last several years. Both volatility and volume would likely increase in the event of an aggressive price decline. Big support in the $75-80/bbl range.
Murphy & Co’s Crude Oil model is currently flat, holding no position. To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/