Light Sweet Crude initially rose during the Wednesday session as the bounce from the $98 level continued. The market has been consolidating between $98 and $104 since late December, and this move would have been the expected outcome. However, the market turned around in the middle of the session and is closing below the $98 level finally.

The $98 mark has been a trigger point for us to sell this market, and this development has us selling a break of the lows from the session. The candle is closing at the very bottom of the range for Wednesday, and this should also point to further weakness as well. The market has looked a bit soft lately, and as a result we have been waiting for this to happen.

The $94 level will more than likely be supportive to one degree or another. If we see a breakdown at this point, we would be watching this area to see if the bulls step back in. If they don't, the market will look for $90 before it is all said and done.

The demand part of the equation simply is lacking, and the prices for oil have been supported more by the shenanigans in Tehran than anything else. The ability for this commodity to stay aloft without that drama is very unlikely overall. Until the situation is completely resolved though, there is always the chance that buyers could step back in.

We are selling a break of the bottom of Wednesday's range, and will look to move stop losses to break even once we get in the $95 area. At $94, we will be watching to see if the market can give way. If it does - we should be able to aim for $90 next. The upside is very limited, and we would have to see a post-$105 level close in order to get long of oil at this point. The markets are far overpriced, so this scenario is highly unlikely at this point in time. The market can also be sold on rallies if we see weakness on smaller time frames.

Oil

Oil Forecast February 2, 2012, Technical Analysis

Crude Oil Pivot Points (Time Frame: 1 Day)

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
94.3567
95.7233
96.7567
98.1233
99.1567
100.523
101.557

 Fibonacci
95.7233
96.6401
97.2065
98.1233
99.0401
99.6065
100.523

 Camarilla
97.1300
97.3500
97.5700
98.1233
98.0100
98.2300
98.4500

 Woodie's
-
95.6400
96.5900
98.0400
98.9900
100.440
-

 DeMark's
-
-
98.6400
97.8650
96.2400
-
-