Good news for drivers: Oil is now below $100 per barrel.
Oil prices have fallen nearly 3 percent since the beginning of March, and based on the technicals, it could possible see an even bigger drop.
Lower oil prices don’t always translate to lower gasoline prices, but the two are strongly related.
"Crude's been kind of a sloppy, choppy mess in here for much of the year," said Richard Ross, global technical strategist at Auerbach Grayson.
Ross, a "Talking Numbers" contributor, sees a double top formation since the start of the year, with the benchmark West Texas Intermediate Crude contract twice failing to break above its $104-$105 resistance level. A double top is a bearish indicator. But, it's in the long-term chart of crude that Ross sees more downside.
"You want to watch that 200-week moving average," which has held for over two years, said Ross. "That [now] comes in at around $94. A break below that key longer-term moving average would really suggest that crude is going lower."
Gina Sanchez, founder of Chantico Global, notes that with U.S. stock supply at a record 395 million barrels, oil is on its way down in the long term.
"We have seen supplies building for a few years now," said Sanchez. "Those supplies are coming online and that's what's going to drive this story."
Though higher oil prices are sometimes considered an indicator of increased economic activity, Sanchez said that oil's current moves are not a reflection of economic demand but of market supply.
"This has more to do with the fact that we have seen very, very tight supplies for some time," she said. "We saw quite a bit of buildup of production, and now that production is going to come online. This happens a lot in crude and it happens very slowly and that's one of the reasons why you see these boom/bust cycles."
Sanchez thinks crude oil is now starting the bust part of the cycle. "I think $98 is probably better for the WTI" crude contract, she said. "But, it could go lower than that."
To see the full discussion on oil, with Ross on the technicals and Sanchez on the fundamentals, watch the video above.
- Oil, Gas, & Consumable Fuels