NEW YORK ( TheStreet) -- The sudden and rapid decline in crude oil prices showed no sign of slowing down on Tuesday, with fears of demand destruction yet again in the headlines, this time courtesy of a new report from the International Energy Agency, and a Goldman Sachs "sell" on commodities issued on Monday continuing to ripple through the markets. Japan's upgrading of its nuclear crisis from a 5 to a 7 (Chernobyl level) was also viewed as contributing to the sudden profit-taking in the markets. U.S. crude was off by more than 3% for the second straight day and recently trading near the $106 mark. Brent crude was down by close to 2% and recently trading at $120.74. From a technical trading perspective, the sudden reversal in crude oil trading was not a complete surprise. Crude oil had been on the verge of a key technical level when last week ended, at $110.30, near the $111 mark that crude oil proved unable to hold in September 2008 when the "last gasp" of the bull run was inhaled and right before the collapse of the financial market. Last week's ending price for crude was the latest in a string of highs for crude since September 2008. On Monday, U.S. crude had reached as high as $113, albeit briefly, to end last week, before the selloff began on Monday.
Coming into this week's trading, therefore, technical analysts were wondering whether crude oil would be able to attain and hold the $111 level, signaling that the bull run, at least from a technical perspective, wasn't done yet. The heavy selling over the past two days suggests that, if it's not a last gasp, the bull market is in the least catching its breath. Another backward-looking trend noted by analysts was that in September 2008, the oil service stocks reversed course a little ahead of the energy sector and oil trade. The OSX index rally ended last week when the group began selling off, even as oil and energy stocks continued to climbed higher. The Goldman Sachs report released late on Monday announced that it was closing out its commodities basket trade. "Although we believe that on a 12-month horizon the CCCP basket still has upside potential, in the near term risk-reward no longer favors being long the basket and we are recommending closing the position for a 25% return versus a 28% target," Goldman analysts wrote on Monday. About oil specifically, Goldman's commodities call states, " Near-term crude oil price risk is becoming more symmetric. Although potential contagion risk in the Middle East and North Africa (MENA) remains elevated and has pushed prices above $125/bbl, at these price levels the risks are becoming more symmetric, which shifts the risk/reward of being long oil. Not only are there now nascent signs of oil demand destruction in the United States...but also record speculative length in the oil market, elections in Nigeria and a potential cease-fire in Libya that has begun to offset some of the upside risk owing to contagion, leaving price risk more neutral at current levels." Goldman predicts that Brent crude may pull back as far as $105 in the short-term.