In Dec, crude oil verified earlier breakdown under the neck line of the short-term head and shoulders formation, which resulted in a sharp decline. As a result, the commodity lost 11% and closed 2015 slightly above $37. The beginning of 2016 brought further deterioration and crude oil approached the 2009 low. What’s next? Is it possible that our interesting ratios will give us valuable clues about future moves?

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Looking at the current situation in crude oil, we clearly see that November was the worst month for the commodity since July. In this period of time, crude oil lost 10.15% and tested the barrier of $40. Although we saw a small rebound earlier this month, oil bears showed their claws once again after OPEC decision to maintain current production levels at around 31.5 million barrels per day and pushed the commodity to a fresh 2015 low of $37.50 yesterday. In this way, light crude lost 9.72%, making our gains on the short position even bigger. Will we see further deterioration in the coming weeks?

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Although crude oil extended gains in the previous month, the barrier of $50 in combination with the 50% Fibonacci retracement and the 200-day moving average triggered a decline below the key support zone. Despite this negative signal, light crude reversed, invalidating earlier breakdown and climbed to the key resistance lines. Will they encourage oil bears to act in the coming month and we’ll finally see an acceleration of declines?

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The overall situation in the oil market hasn’t changed much since our previous Oil Investment Update was posted. Looking at the charts from today’s point of view we can summarize Sep in one simple sentence: a prolonged consolidation between Jan lows and Aug high. What’s interesting, we saw a similar situation in May and June - after many weeks of waiting for a sizable move crude oil declined sharply and rewarded earlier disappointments. Will we see similar price action in the coming weeks?

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In the last weeks of August crude oil accelerated declines, which resulted in a breakdown not only below the Mar low and the lower border of the declining trend channel, but also in a drop under the psychologically important barrier of $40. In this way, the commodity declined to its lowest level since Feb 2009, hitting a multi-year low of $37.75. Despite this deterioration, light crude reversed and rebounded sharply, invalidating earlier breakdowns and climbing to the 50-day moving average slightly below the barrier of $50. Can we expect lower prices in the following weeks or should we prepare for a major rally?

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