Crude Oil - Temporary bottom found

The price of crude oil has not indicate any bottom yet like the price of crude palm oil. Price of crude Oil futures for delivery in January in NYMEX went to as low as US$33.44 per barrel today before rebounding to close at US$35.85. The Organization of Petroleum Exporting Countries (OPEC), supplies 40 percent of the world’s oil have agreed earlier to cut output by 2.46 million barrels a day starting on Jan. 1 2009. Still, prices fell 37 percent this month.

The price action today created a temporary bottom because a candlestick reversal pattern called the "hammer" was formed from today's action. Price of oil has severely oversold. The weekly stochastic has been in the oversold level since August and the monthly stochastic has started to be oversold. The last time monthly stochastic was oversold was in January 2007 when price started to rally from US$60 to US$140.

A rise above US$36.80 shall confirm the reversal which may push it back slightly above US$40 level. Price of crude palm oil maintains at the trading range of RM1,400 and RM1,700 per metric ton.

World consumption of oil is expected to decline further amid global economic slowdown.


Daily Crude Oil chart as at 19 December 2008 using NextVIEW Advisor. Click on chart to view enlarged chart.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

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