Clive Maund: Oil Market Update

Posted by Clive Maund

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Going on price alone you may be tempted to think that oil is a buy here, after dropping for 6 days in a row, as we can see on the 6-month chart for Light Crude shown below. However, the volume pattern looks bearish. The drop so far this month has been on heavier than normal volume which has had the effect of driving volume indicators to new lows – way below where they were at the August trough. This persistent heavy downside volume implies that oil is on the verge of crashing this support and dropping much more steeply, and at the time of writing it appears to be, with the broad market dropping hard too.