For those following the oil market closely, it is hard to believe that there is such a compelling argument that oil prices should move lower significantly. Yet, markets are acting that way based on data which may not actually be credible. Adam provided a very comprehensive overview on that yesterday here. It is a must read if you're looking into what's driving the oil market at the moment.

As much as conditions remain tight and supply from most key producers are at capacity, adding to the fact that global inventories are low, oil prices haven't shown much confidence since the middle of June. In fact, prices look set for another weekly decline that will make it a drop in 7 out of the past 9 weeks.

I wouldn't doubt that there are still plenty of oil bulls around. I for one am still in that camp but as a trader, you always have to respect the technicals. That is the number one rule as that is how you define and limit your risk.

The picture above is rather bleak for oil, to say the least. The break back below $90 and a drop below both its 100 and 200-day moving averages is suggesting that selling pressures are picking up and there is potentially more downside to follow. Sellers are in control now and sentiment is leaning more bearish. I wouldn't want to be fighting that, as much as I believe oil prices are going to come back.

The trendline support (yellow line) is the next key level to watch and that holds closer to $80 before we get to the figure level itself. A further drop below that will leave very little in the way of a plunge back towards the December lows closer to $63 to $65. I would argue that might be where oil may look like a fire sale but we'll have to see how market sentiment continues to play out before jumping to any firm conclusions.