“Don’t panic” was the cry from more than one OPEC member yesterday, including head honcho Abdullah al-Badri. We saw a bounce to 85.47 yesterday and that’s been completely turned around today.
One of the reasons for the falls today is expectations that US inventories are going to show a large gain, thus reinforcing the over supply/lack of demand bearish trade. With US shale/oil production at 30 year highs the lower prices haven’t impacted that production just yet.
The 80 level is a big fat target now and if we go there or below it puts us into a previously congested area between 80 to 70 bucks.
Brent crude weekly 11 11 2014
We’ve also broken through the 50 fib of the 2008/2012 swing up at 82.30 and the 61.8 fib comes in just ahead of the 70 level
Brent Crude monthly 11 11 2014
With WTI staying under $80 also the Saudi price cuts will be looking to push the Brent price lower to narrow or negate the spread. It’s been said that US shale producers can weather an oil price down to $60-70 back that puts them at break even levels which is not good for investors or shareholders.
I suspect we’ll see Brent hold up at 80 on the first attempt and I’ll be interested in buying in if we get towards 75 and building down to 70, depending on the news that gets us there. If US manufacturing starts picking up meaningfully in 2015 then that will put a bid in WTI which has similar tech around the 70-75 area so I’ll look at a long there too.
WTI crude oil weekly 11 11 2014
