Oil has been the hottest performing commodity, after trading near $100.00 a barrel a few weeks back. But after failing to break $100.00, oil has been on a downtrend, with traders taking some profits due to the extremely overbought condition.

On Monday, the January light, sweet crude was trading below $90.00 at $87.70 on the New York Mercantile Exchange, the lowest level since October 25. Driving down prices is speculation that the Organization of Petroleum Exporting Countries (OPEC) may increase its daily production quota on Wednesday in an effort to bring prices down a bit. OPEC has indicated that it may increase production. Analysts estimate that the increase could range from 500,000 to one million barrels a day.

On the chart, there is a bearish double top that formed after failing to break above $100.00. The neckline is around $87.50 or around the current level. A break below could signal further weakness ahead in the upcoming sessions.

The near-term technical picture for the January oil is moderately bearish, while the Relative Strength has been on the decline and is now relatively weak, which points to potential near-term selling pressure. The January oil is trading below its 20-day moving average (MA) of $93.81, but is holding around its 50-day MA at $88.55. Weakness could drive the January oil down to the 100-day MA at $80.55.

For the economy, the lower oil prices are positive, as high oil prices translate into higher corporate costs and impact earnings. For the consumer, high oil prices mean higher gasoline prices. People could drive less and make fewer trips to the malls, which in turn, impacts retail sales and the economy.

Over the next few weeks, watch to see if oil can trend lower, which could help the retail sector at this important shopping season as we approach year-end.