Penning this 7:41 AM, 18 July, 2008.
Last night turns out to be a critical day for crude (August 2008 contract). To me, the important $132 support was broken, and touched a low of $129, before closing $129.29. Next support seen at $120-$122, and the next one at $109-$110, etc.
I believe some if not many longer-term traders will have set their stop at around $130 (plus minus $2) last night. If so, many should have been taken out of their long position already. Technically, this is a breakout on the downside, and some traders will have joined the bandwagon on the short side too last night (and the prudent ones with stops). The extent of the downfall over the last 3 days is quite massive, taking out nearly $17-$18. This is no small fall and in my opinion - has changed the long term character of the chart. Of course, prices almost never fall in a straight line (except in panics and even then ...) - you can expect rebounds soon - but on most people's minds now is whether crude will be able to surpass $148 again in the next few months.
The price chart below should say it all.
Naturally, the US markets cheered the fall in crude, by rising strongly for 2 days in a row. European markets closed in decent green as well last night. I expect Asian markets to follow.