Oil / USO

Are we looking at another drop from the 20 day EMA resistance line?

Are we looking at another drop from the 20 day EMA resistance line?

Probably. We have a minor relief bounce on a delusion that severe production cuts by opec are starting to dent the inventory overhang.

Production cuts are not the reason for prices to go up. Mean there is plenty of supply out there.

Once this delusional bounce plays itself out the reality will set back in. Plenty of oil in the world and weak global economy.

OGM, I think your correct about demand but your missing part of the supply issue. The credit crunch is killing new exploration and investment so production of oil globally is actually declining so spare capacity isn't huge by any means. Plus, the $40 level on the monthly charts of oil was a multi-decade breakout and it sure seems as if thats all we are testing continuously. Not to say that XOM and others can't fall since I also believe they are too expensive especially for this market environment. In addition, seasonally both oil and gas historically bottom right around this time frame for 2 months and then go down again, so maybe this subsector will hold on for a little while longer.