Crude oil has been selling off continuously after hitting its most recent peak on September 25. Both WTI and Brent crude continue to trade lower. Today, oil prices are at similar levels relative to last April. WTI is fighting to stay above $50, and is trading close to $50.40. Meanwhile, Brent crude is trading close to $55.90.
After breaching overbought territory last Monday, crude oil is now returning to more normal trading conditions. From a technical standpoint, oil prices have room to fall much further without any risk of heading into oversold territory. As prices are near a previous top, if the current $50/$55 (WTI/Brent crude) support area is broken, crude oil may fall sharply lower.
Yesterday saw interesting data from the Chinese customs department, suggesting that the country has been buying a lot more crude this year. More specifically, the country is now sourcing a lot of crude from non-OPEC sellers such as Brazil and China. Our take on the data is that crude bulls should tread cautiously given the market's reliance on Chinese demand.