CommoditiesTrader

WTI Near "Support" While Sentiment Still To The Downside

NYMEX:CL1!   Light Crude Oil Futures
WTI has played out fundamentally, and the fundamentals (along with sentiment) still remain to the downside. Traders love to pick out bottoms by catching falling knifes, and they're usually cut up in the process.

On a risk:reward basis, sure WTI may seem like it's at a nice area to buy. Yet, I think it is still to early. Crude will likely find support at the longer-dated support in the low $43's per barrel. While I would suggest opening fresh shorts without a pullback, it still may be early to gobble crude futures .

The implications are still apparent. Supplies are still gluttonous, and shale companies are hurting. WBH Energy has become the first casualty of the oil             warfare. I expect more to come, particularly Cheniere (idea to come).

I have been short since $74, and I wouldn't suggest serious upside unless $53.5 is retaken.
Where do you see the bottom for WTI?
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It's hard to fully commit to a number because I think it will depend on ongoing events. However, I do believe this is the "real" range for oil prices given both global growth and demand for oil is shrinking. Some analysts believe it will take years at the current pace to consume current stockpiles.

I do think that if supplies continue to growth while economic conditions worsen, we could see 2008 lows. The implications of oil at these levels for US producers when considering their leveraged exposure to debt is large. It could cause a rumbling within the economy, which in turn would effect consumption.
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