Here is why Commodity Broking is bearish on crude, copper

Jonathan Barratt of Commodity Broking Services feels that the overall fundamental and technical picture for copper remains bearish. He expects copper to head down to the USD 6,500 per tonne levels in London Metal Exchange (LME).

According to Barratt, the markets have been observing lack of confidence for crude. "With the Euro zone concerns, the price pressure remains to be on the downside," he pointed out.
Talking about the dollar index, he indicated that it could move to 85 levels, if the situation in Europe worsens. Here is the edited transcript of his interview. Also watch the accompanying video. Q: What level do you foresee on crude? How much would the slippage in crude help a market like ours?
A: Crude has been very volatile. With crude, there is a lack of confidence in the market. Whilst equity prices continue to trade lower, crude in itself would trade lower.
The level of confidence has been taken away from the market because of the eurozone situation. We might be able to trade oil a little bit lower, but if it gets any lower than this, OPEC will come into the market. It is a concern, but it relieves a little bit of pressure, particularly on India because it imports most of its oil. Q: India is breathing a sigh of relief with these rates, especially on Brent getting all the way to USD 100 now. Aside from the downside risk, what looks like an upside cap on crude?
A: At the moment, the resistance for crude has to be at USD 80 per barrel. If we take it up to USD 85 per barrel, the old major resistance is USD 90 per barrel.
With the concerns in Europe, the price pressure remains to be on the downside. At the moment, it still remains soft. I would expect it to trades back to USD 80 per barrel, but at USD 85 levels, there will have to be a change in sentiment. Q: There has been significant and consistent pressure in copper prices. What do you see for some of these industrial metals in terms of a downside risk now?
A: Prior to 2008 Lehman concern, copper was trading down to the low end around USD 4,000 per tonne in LME. The market can trade significantly lower from these levels. It has broken a significant trend.
I am still bearish on copper. I am not only bearish on copper because of the Europe and US issue, but also because of the situation in China.
The overall fundamental and technical picture for copper remains bearish. We could see copper head down to that USD 6,500 per tonne in the LME. Copper is still quite weak on a lot of the base metals. Q: The dollar index has been spiking to new highs now. How do you see the dollar index move from here?
A: The dollar index is a classic play and it is helping the commodities or economies to get a little bit of kick start. While the default currency is US dollars, the amount of US dollar is now a safe haven play with these concerns. This will apply more pressure on the commodity complex.
Without any clear resolution yet, people will continue to trade towards the US dollar. We looked at the USD 80 level, which has now reached. If there are more concerns developing that USD 80 levels will continue to become support and we can look for USD 85 levels. The trend for the US dollar remains pretty much intact and it will continue to trade higher.