A Good Sign for the Oil Bears

Crude oil bears just got a bit of “price confirmation” of their thesis…  
 
In the past few months, a handful of market analysts have written about the possibility of a big correction in crude oil. These “bears” note declining U.S. demand and historically high excess inventories. They also cite the large amount of bullish crude oil bets speculators are carrying right now (which is a bearish contrarian signal).#-ad_banner-#
 
Folks betting on an oil decline have suffered recently. The U.S. crude oil benchmark, West Texas Intermediate, climbed from $82 a barrel in October to $110 a barrel in February (34% gain). But in just the past week or so, crude oil has started moving in the bears’ direction…  
 
As you can see from today’s chart, crude traded in a tight price range from late February to late March. Recent trading has produced a downside breakout from this range. Traders who believe excess inventories will depress prices now have the short-term trend on their side.