Crude oil futures on the New York Mercantile Exchange have been hovering around the technically important level of $100 a barrel. The market has seen a decent rebound from last week's low of $95.44, basis nearby March futures, which at the time was a fresh six-week low. If recent history continues to play out, however, crude oil prices won't be able to hold above what is now major psychological resistance at the $100 mark.
Indeed, March Nymex crude oil futures are presently in a gentle five-week downtrend on the daily bar chart, from the early-January high of $103.90. Since mid-November, crude oil prices have traded in a choppy and sideways range on the daily chart -- bound by overhead resistance at the January high of $103.90 and by strong support at the December low of $92.95 a barrel. It would take a price move in nearby crude oil futures beyond this trading range to suggest a strong price trend developing in the market.
An upside breakout from this trading range suggests nearby crude oil futures prices are challenging strong chart resistance at the $110 level. A technical breakout to the downside of the range points to crude prices challenging $90, or even $85. Technical odds, however, suggest crude oil prices remain around the $100 level or just below it.
From a worldwide fundamental perspective, the downside in nearby Nymex crude oil futures has been, and will continue to be, limited by the heightened tensions in the oil-rich Middle East. There has been political violence in Nigeria, which is Africa's largest oil exporter. Syria continues to brutally suppress the opposition. And Iran belligerently fends off world concerns regarding its nuclear ambitions. This uncertainty adds about a $20-a-barrel risk premium to Nymex crude oil prices.
Thursday morning's news that a debt-restructuring agreement between the Greek government and the private sector was viewed as bullish for the crude oil market, as it helps to stabilize the overall European Union sovereign debt crisis, which is in turn bullish for the entire raw commodity sector.
An in the U.S., the balance of supply and demand can't be considered bullish for the liquid energy markets. Demand for gasoline is at a 10-year low and demand for crude oil is at a 13-year low, as reported by the U.S. Energy Department on Wednesday.