Crude Oil futures (symbol: CL) have traded in the $75-115/bbl range since Oct10. Recent price action is aggressively heading for a test of the $75-80/bbl major support level, a very significant band of support.
We continue to believe crude oil is in a large trading range between $75-115/bbl. Breakout from that range, when it occurs, will be aggressive and extremely volatile. Hard to believe, but a failure of the $74.95/bbl level likely means substantially lower prices are on the way, perhaps even a retrace of the $32.48/bbl low from Dec08.
Volatility has ticked up on this recent down move. Stochastics are entering oversold territory, however the RSI is not yet showing a buy signal. Volume is up on the down move. Expect a serious test of the $77.28/bbl and $74.95/bbl levels for a decision.
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/