[WTI] - Oil dropped to its psychological support level of $80 in a day where the commodity reached an almost two-year low. The last time markets saw levels drop this far was in November 2012 at a low of $84.
The technical support level of $80 will now change to between $77.30-$74.90
Dropping almost $30 since June, oil is suffering from a supply glut and weakening demand. Having already priced in the Saudi oil price, where the Middle Eastern country has admitted that it is willing to allow the price to slip even further, the current level is attractive to buyers following the ‘oversold’ levels seen earlier in the day.
The psychological support level of oil is $80 whereas the technical support level is $77.50, and today witnessed WTI finding support at the $80 level and calming for the time-being in the $80 to $90 range. Within this scenario, this support level will, in high probability, become the lower resistance level.
The current down trend seen over the last 24 hours took oil from $82 to $80 and led to overselling. This subsequently raised the odds for retracement on this bearish sentiment. In turn, this could push prices up to a state of re-addressment. All the time, the $90 higher resistance level could be retested as a key major resistance level after it played a main support level during Aug – Oct 2014, before it broke to the downside.
A Day with Oil
Wednesday 15 October 2014
9.30am – oil plunges from 82.05 to 80.41, breaking the support level
10.30am – support level of $80 repels price back
4.30-7.00pm – Ahead of storage report, oil bounces off $81-$82 with the announcement of weak USD figures
Thursday 16 October 2014
2.00am – Support level of $80 buffers prices again
9.00am – Support level almost reached
2.10pm - Support level of $80 broken
Continuing fluctuations follow.