By Phil Flynn, Alaron
You've lost that bullish feeling, lost that bullish feeling. You've lost that bullish feeling and it's gone, gone, gone!
Oil is trying to find that bullish passion that it lost sometime ago.Yet even after the big oil breakdown last week, the market failed to find the inspiration it needed to continue its assault on the downside. Oh sure, the bulls were bloodied last week as the PIIGS (Portugal, Italy, Ireland, Greece and Spain) started to fall apart and they are hesitant to step back into a market that has definably lost any semblance of what you would consider a bull market. Yet with a winter storm barring down on the north east and the heartland of the heating belt and the fact that the Euro seemed to stabilize, oil tried to make a bit of a comeback.
Of course a little dash of geo-political tension never hurts the oil market. It may not help it but it sure can't hurt. Iran is flaunting that fact that it is enriching uranium, sending a strong message that they do not care what the rest of the world thinks. And why would they because they do not care what their own people think. Their illegitimately elected President and sphere of hatred says that Iran would start enriching uranium to 20 percent on its own if the world continued to play games with Iran. And true to his word, Iran today announced that it was indeed enriching uranium to 20%. Maybe he is just mad because he bet the Colts in the Super Bowl.
Nigerian rebels, after threatening all out war last week, have been making claims according to Bloomberg News that it "disabled" a trunk oil pipeline operated by Royal Dutch Shell Plc. That in and of itself fails to move the market especially in a world full of a glut of spare capacity, yet it is another reason someone may not want to be short.
Oil prices may try to test the breakout are between 7300 to 7400. At those levels we would recommend putting on short positions. As readers of the Daily Energy Report know we have been saying that we expect a move down towards $40. The daily chart on the March Crude seems to suggest that we could see a move down into the sixties very shortly.
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Republished with permission from Alaron's Energy Report Daily.