Crude Oil breaking down alongside of the metals

Crude oil has been somewhat immune from selling pressure tied to risk aversion trades mainly due to geopolitical tensions involving Iran and fears of a potential closure of the key Hormuz Straits. While many commodity markets have been moving lower the last month or more, crude had staged a big rally off of the $75 level running all the way to $100+ before faltering. It then retreated towards $95 where buyers promptly bid it back higher again. However, they were unable to beat back selling pressure that emerged above the $100 level. That sent longs liquidating trying to snatch profits before they disappeared and emboldened fresh short sellers who were banking on risk aversion trades outweighing geopolitical fears. Today the latter appear to have won out.

Crude is now sitting precariously on a major support level at $95. If it cannot immediately turn around and rebound higher, a technical case for a top in the market will be evident on the chart. The market could then fall towards $90 relatively quickly mainly due to the fact that it was able to withstand the "slowing global economy" theme for so long.

Falling crude oil prices, while being of immense assistance to both consumers and business, would feed further into the psyche being established in traders' minds that a wave of deflation is coming once again.

It would appear that nothing short of a reinvigorated QE program and some sort of stop gap measure coming out of Europe is going to be able to revive this market. Either that or something more sinister involving Iran.