Mingze Wu | Dec 02, 2013 06:06AM ET
Hourly Chart
This may be part of the reason why prices remained below the 93.25 resistance even though risk appetite was strong during Asian hours. Failure to breach 93.25 opens up a move back towards 92.0+ levels, and currently price is testing 93.0 round figure (and soft support), with bearish acceleration expected should the level be broken.
Stochastic readings suggest that bullish momentum isn't fully over with the Stoch curve still a fair distance beneath the Overbought region. However, given that previous peaks have been seen around 70.0, it will not be too surprising if the Stoch curve reverses lower from here and adds as a confirmation for the bearish push towards 92.0.
Daily Chart
This notion is also supported by Fundamentals. Production from the US continues increasing and the country is expected to take over the title of world's largest producer by the end of 2015. The recent Nuclear Agreement with Iran has also cooled the turmoil in the Middle East, resulting in less speculative play in Oil due to fear. With global demand falling (as evident by the slowdown in OPEC production - in order to keep prices lifted), WTI Crude prices are expected to continue falling in 2013 and well into 2014.
That doesn't give carte blanche to bears though. Keep in mind that from a long-term perspective the recovery momentum is still in play. Furthermore, it seems that bulls are not going down without putting up a fight - see the sudden rise in WTI prices last Friday which was not triggered by any fundamental news release. Hence traders should certainly be wary and not automatically assume that it will be a smooth journey south from here.
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