Crude oil struggles to find an equilibrium price

After traders and short-term speculators repeatedly tried and failed to break through the $62.50 level of technical resistance for crude oil, they have apparently thrown in the towel (for the moment) and started to trade back down in the trading range towards the mid-$50's. On Friday, the NYMEX April crude oil futures contract closed at $57.11, a decline of 8.6% off the recent intraday peak price of $62.49.

Despite all the chatter, crude oil is mostly trading based on short-term chart "technicals" rather than long-term economic fundamentals. In particular, the chart shows that $62.50 is a level of intense technical resistance.

There is more than enough crude sloshing around in inventories to fail to justify even current price levels, but that doesn't bother traders and short-term speculators.

Crude oil futures prices will be quite volatile over the next two weeks as traders and short-term speculators shift from the April contract, which ceases trading on Tuesday, March 20, to the May contract, which closed at $59.58 on Friday, which will become the "front-month" contract for trading on Wednesday.

-- Jack Krupansky