Light Sweet Crude had a bullish session on Monday as the world continues to focus on the tensions between the West and Iran. The Israelis had two embassies attacked on Monday in both India and Georgia, although the attempt in Tbilisi failed and the bomb was diffused without incident. Israel immediately blamed Iran, and oil traders got nervous as a result. Adding to all of this, there are now some insurance concerns with shipping companies, and as a result many cannot even load in Iran now, and this will cut back on some of the supply.
The change of attitude in this market has been made over the last several days, and it is only now that we see another signal in this market. The trend line that was the top of the down channel has been broken and retested at this point. The market looks like it is going to continue northward, although it is unclear as to whether or not the market can sustain this momentum. The fact that the headlines are now pushing the movement makes sure that there are plenty of doubts in both directions.
All things being equal, it looks as if the market will continue to rise, but the $104 level above is massive resistance. The breaking of that level would signal another leg up in this market, and although we would have to prefer to be long over short, it also looks like choppiness could be the type of market we are going to see for the next few sessions. Buying this market is possible, but pullbacks are better opportunities as the market will more than likely offer several chances to buy Light Sweet Crude at cheaper prices. None the less, even if there is no pullback, the $104 level is what will set the tone for the next big move and a break of that level should be considered only as part of the $105 level going forward. If we can get above that area, we should see prices hitting the $115 mark in the future. We aren't going to sell at this point.
Oil Forecast February 14, 2012, Technical Analysis
Crude Oil Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3