Just two weeks ago I wrote about the historic bullish position in the oil market
. The price of West Texas Intermediate Crude was hovering up near the $105 level at the time.
In the two weeks that have passed, the price of crude has dipped below the $98 level and is currently hovering right at the 50-day moving average.
Despite the pullback, the large speculators have changed their stance very little. The long position is still over 400,000 contracts, and it has been there for four straight weeks.
Oil is oversold at this point, and I can see the price bouncing a little over the coming days, but until the large speculators unwind some of their long contracts, the pressure should be to the down side.
I see the ultimate support for this pullback down at the $92 level, and even then it will depend upon the sentiment and where it stands at that point.
From a fundamental perspective, I don't see the demand for oil increasing substantially during the coming months.
The U.S. economy is still limping along, and the latest report from China shows that their growth is slowing. These are the two biggest economies of the world and neither is firing on all cylinders right now.
With the technical picture and the sentiment picture pointing toward continued selling, about the only thing that could help push prices higher would be a geopolitical event.
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