IMVHO there is no way oil should be priced as cheap as it has been in the last week. I have been adding to my DXO long position. Wouldnt it be something if oil surged after the election? hmmmm.... some tinkering perhaps??
3 things, first look at a monthly continuation chart. take the late 1998 low of $10 and the 2008 high of $147 and draw a fibonacci retracement. The 61.8 area has held very nicely as support. Now draw a trendline on the same chart from the 2003 low to the 2007 low and it crosses the same area as the fib support. Also note that crude has a recent correlation to the S&P of like 80%. We should get a decent short covering post election relief rally here, that should bring crude along with it. As far as oil being too cheap here, I ultimately think crude will hit $40 within 12 months or less. The global decimation of wealth will have longer lasting implications to commodity demand, my opinion of course. Commodities always overshoot the upside in a bull market, and the downside in a bear market.
Crude has broken through the 61.8% fib support now, if we settle sub-$61, my next area is $54.70 followed by $50.50