Oil LeakOptions Xpressupdated May 11, 2012TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.Friday, May 11, 2012 Some traders who are expecting Oil prices to continue to fall in the near-term but who potentially may wish to go long Oil if prices continue to fall may perhaps want to explore a diagonal ratio spread. This spread involves buying a near-the-money put in a closer to expiration month and selling multiple further out-of-the-money puts in a farther out contract month. For example, with July Crude trading at 97.00 and August Crude trading at 97.29, the July 95 puts could be bought and 2 August 87 puts sold for a credit of 0.45, or $450 per spread, not including commissions.Fundamentals Apparently Crude Oil prices can move in both directions, as a nearly $10 decline during the past few trading sessions has many analysts questioning the sustainability of the Oil bull market that began in early 2009. The bearish arguments are many, including ample global supplies, rising value of the U.S. Dollar, and a move away from "risk" assets due to continued economic concerns out of Europe. Earlier this week, Saudi Arabia's Oil minister Ali Naimi was quoted as saying that "Oil prices are too high," which was interpreted by some analysts as a sign that OPEC may raise its output quotas at its next meeting in June. Here in the U.S., Oil inventories are more than ample, with Oil inventories standing at their highest levels since August of 1990. Inventories are especially burdensome in Cushing, Oklahoma, which is the delivery point for NYMEX WTI futures. In Cushing, Oil supplies are at record levels at just over 44 million barrels. This increase of Oil moving into Cushing looks to be tied to the eventual reversal of the Seaway pipeline that will allow Oil to move from Cushing to the Gulf Coast and then be shipped to the East Coast. Continued uncertainty in Europe due to elections of anti-austerity parties in both Greece and France has increased the likelihood that any agreements to aid the fiscally troubled Euro countries may be in jeopardy, which in turn has sent some traders fleeing away from commodities and into what are considered safe haven investments. Large and small speculators were heavily net-long Crude Oil futures, holding a combined net-long position of over 320,000 contracts as of May 1st. It is this long liquidation selling that has triggered the steep decline during the past few sessions, as weak longs finally threw in the towel on their positions, with few willing buyers emerging at current price levels. Before becoming too bearish on Oil prices, however, we should remember that a "risk premium" may still be needed, especially given the potential for disruptions out of the Middle East and West Africa.Technical Notes Looking at the daily chart for July Crude Oil, we notice prices holding just above the 50% Fibonacci retracement level, as buyers seem to be emerging as fresh lows are being made. The market is holding near the 200-day moving average, trading on both sides of this key long-term indicator. The 14-day RSI has held just above oversold levels, with a current reading of 31.83. The December 16th low of 93.45 looks to be the next major support level for the July futures, with resistance found at the April 10th low of 101.77 Mike Zarembski, Senior Commodity AnalystEditorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.