The futures’ positions of the commercial players remains largely unchanged since last week when we saw the oil price spike up to $55 dollars a barrel and despite today’s fall in the spot market my view remains unchanged and has been reinforced by the monthly WTI crude oil chart which shows a long legged doji followed by a hammer – two classic reversal signals which suggest that we are now at the bottom of a long waterfall of prices.

The reversal in crude oil prices now seems to be in place, with the COT index moving firmly away from the extreme of two weeks ago, which suggested that we should see bullish trend starting in oil prices, which now seems to be the case in the daily oil price, as it breaks out from the sideways consolidation of the last few months, a moves above the $50 per barrel region. Supported by the moving averages this move now seems to have some momentum, and we should now see this reflected in the COT index for oil over the next few weeks.

The weekly chart for crude oil futures, shows little change in the COT index data, with a very low reading once again, suggesting that we are reaching a turning point for the daily oil price, and it would not be a surprise to see oil prices rising in the near future. The trend of the last three months has been for oil prices to move sideways in a relatively narrow trading range between $35 and $50 per barrel. The longer this trend continues them the more dynamic will be the breakout from this range when it occurs. With OPEC having decided not to cut oil production this week, this could add a bullish sentiment to the market this week, and it would not be a surprise to see a break above %50 per barrel as a result. Whilst the COT index is not a timing tool, it can provide us with a direction, and from the data we have seen in the last few weeks, with the commercial contract holders not selling into the market, we should therefore expect a move higher in due course. You can find the latest daily oil price on the live charts, along with the spot silver price and spot gold prices. In addition an economic calendar is now also available which is updated each day with the main fundamental news.

COT Index Light Sweet Crude Oil - 3rd March 2009

The COT index is still extremely volatile with peaks one week and troughs the next, and with no real direction or indication of a price trend, which in many ways reflects the market at present, with prices consolidating in a relatively narrow trading range in the daily oil price between $35 and $50 per barrel. As you can see from the chart, this week has registered a very low figure approaching zero, and for this to be meaningful we will need to see this confirmed in the index next week, and if so, then this could suggest we are about to see a rise in oil prices in the next few weeks. Clearly we cannot rely on one weeks data to base our trading decisions, but it is an interesting signal for the next period, particularly if the figure from next weeks report is at the same low level. This would suggest that the commercial contract holders have stopped selling futures,  in the expectation that higher prices will follow shortly, so we may be seeing a floor to the current oil price decline from last year. The latest oil prices are now available on the daily oil price live chart, along with an economic calendar, and live news feed.

COT Index - Weekly Report Crude Oil January 27th 2009

With the index falling, this suggests that the commercial group is expecting crude oil prices to fall further and are therefore stockpiling supplies in the hope of prices rising in the future. For a clear buying signal we need to wait for the index to reach a low of 5-10, before we can expect any significant rise in prices in the short term. If you would like to follow my daily oil prices posts then please just follow the link.