In Crude Oil, we can see that 2009 has produced a doubling of price. Many analysts are now setting their eyes on the 100 dollar level. However, the most recent breakout in price has not followed thru and instead we have gone thru four weeks of sideways price.

Crude Oil has just arrived at its weakest seasonal time of the year. The October thru February period on average usually brings lower prices. If we zoom out and look at the chart on a longer term basis, we can see that there is an important band of resistance that exists from the 80-95 dollar area of crude.

When we combine this factor along with technical indicators that are flashing a potential loss of momentum, we can see that the odds of a strong rising crude price over the next few months would warrant caution here. A lot will depend on the strength of the US Dollar, the supply side equation or a geopolitical event to provide impetus for higher price.

However, a move above the highs established in October might provide a burst to the 95 dollar area. But beyond that, while we recognize that price always rules, it would seem the seasonal favor sideways to lower prices on average. This is further confirmed when we look at the seasonal aspects of the US Dollar (chart below). The chart is telling in the fact that it shows the US dollar for the most part, spends most of its time sideways to lower.

However, the mid November to mid December time frame is one of these exceptions where the US dollar usually bounces higher. Thus over the next month or so, on average, the crude oil market is most likely to trade sideways to lower and the US dollar should incur a bounce.

Bottom line: Crude oil support is the 60-65 area and the 70-72 area based on the moving averages. As long as crude remains above the 72 dollar area, the trend remains up. Should crude oil move above the 83-84 dollar area, then a contra-seasonal rally to the 95 dollar range would be the most likely outcome. Barring a geopolitical event, the crude oil market usually moves lower during this time of year. As long as crude is below the 83-84 area, odds favor lower prices over the next month and potentially into February.

Going forward is another story. The lack of planning for an oil emergency in this country could have crippling effects. Can you imagine a crunch during the farming planting season? Since most everything is tied to crude oil prices, it should be on your radar constantly. If peak oil is a truism, there are much higher prices coming in the future for most commodities.