mustbepatient (99.30)

Short-term oil outlook

July 13, 2009 – Comments (0) | RELATED TICKERS: USO , SCO , UCO

Marketwatch has a good article summarizing what is going on in the oil markets lately.

http://www.marketwatch.com/story/speculators-leave-crude-oil

Basically, there has been a lot of selling pressure the past two weeks, both from speculators deleveraging and from other speculators jumping on the short side.  However, speculators can't keep switching to the short side at this pace, and when this selling pressure abates, oil should be free to rise.

Oil is oversold, but the drop is slowing and the last two trading sessions actually have a bullish bias.  

http://stockcharts.com/h-sc/ui?s=USO&p=D&yr=0&mn=6&dy=0&id=p46391510574

I think oil may be in more trouble eventually, but I think the odds are that it will rise the rest of this week at least.

Disclosure:  I shorted SCO today.