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OPEC is currently pumping oil at record amount, while US oil production has hit highest level since 1997. On the demand side, we are seeing transport companies such as FedEX issuing slow down warnings. This slowing down of demand is in-line with the global concerns over Europe and China. With supply going up and demand coming down, Crude bulls will be getting more worried each day even before US flood the supply from its Strategic Petroleum Reserve.

CNBC interviewed Andrew Lipow, president of Lipow Oil Associates – a consulting firm specializing in oil. He believes that bulls who were “enthusiastic” about bullish prospect after QE3 are reconsidering their long positions. There is some credence to that as we’ve seen oil prices dropping sharply the week after QE3 has been announced, instead of bringing oil close to 2012 highs.

Brent Crude Weekly

Unlike the S&P 500, which reached new highs in 2012 post QE3, Brent was not even able to touch $119 per barrel, a level that was acting as a support back in April – May 2012 and a ceiling/floor back in Mar – August 2011.

We are also not very far away from the levels in January 2012, where Brent started at around $108 per barrel. We’ve touched $108 previous week briefly before bouncing back up to $112 per barrel. However keep a lookout for any potential break at $108 which will potentially flush out all the remaining bulls left.

Source: Crude Oil Prices May Decrease Further: $108 In Focus