Why This Week Will Be a Bad One for Oil

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Energy bulls appear to be confident. According to the weekly Commitment of Traders report, big money and producers have raised their long bets on oil for the seventh week, to a nine-month high.

Nonetheless, crude oil continues to run into the major resistance wall at $98.12, with a $98.15 high on Friday.

Meanwhile, the U.S. dollar index pressed to new swing lows, testing the zone under 79. This will create support for crude oil and other commodities.

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With oil's failure to hold $98, we have seen profit-taking put this market a little more than a dollar lower, below $97. A close below $96.51, Friday's low, will likely create more selling.

Look to the dollar index to trade above 79.50, and for previous support to put additional pressure on crude today. If we close below $94.83 to $94.95, it will likely signal a $2.50 move lower.

That being said, while we can see we can expect to see profit-taking continue this week, the broader trend would remain bullish all the way down to the 200-day moving average at roughly $92.


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