(MENAFN- Daily Forex)

• The light sweet crude market has been somewhat negative over the last month, as October has been somewhat bearish, especially as there are a lot of concerns when it comes to the overall supply and demand equation.
• After all, Russia, OPEC, in the United States are all pumping out massive amounts of oil, and that excess quantity is grounding the demand part of the equation.
• However, during October, we had seen the United States apply more sanctions against a handful of Russian oil exporters, causing a bit of a bounce.

Realism

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Realistically speaking, the sanctions against Russia have been in effect for years, so the question will be whether or not they can find some type of way to send that oil to willing buyers. I suspect that the market is starting to sniff out the reality that Russian oil will find its way somewhere, and the supply of crude oil will continue to be fairly robust, thereby keeping prices somewhat lower going forward. That being said, there's also the question as to whether or not economic growth will pick up, so at this point, my plan is just simply to follow the charts and not to get too overly caught up in the fundamentals or wants, as there are a lot of moving pieces that could cause chaos.

If the market were to break above the $65 level, then I think it shows extreme strength, and crude oil probably goes working its way back to the $80 level, perhaps through the entire month, finding a lot of volatile but positive energy. On the other hand, if the market were to start dropping again, the $55 level below is a major support level that would have to be respected, as we have bounced from there a couple of different times. When you look at the longer-term charts, the reality is that the $55 level is a massive area that, if we were to break down below there, could open up a massive drop to the $30 level over the next several months. While I don't necessarily expect that to happen, it is something you need to keep in the back of your mind. More likely than not, rallies will fade until we get a massive change in the global growth outlook.

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