Brent rises above 61.8% retracement of the Q4 plunge
I love it when a major level breaks on big news. It's the ultimate confirmation and it's even better when the level falls convincingly after consolidating below it.
That's exactly what has taken place in Brent crude. It had been consolidating below the 61.8% retracement level for the past two weeks before it shot higher today on the US cutting off Iran exports.
The breakout could be a big one. US talk about Saudi Arabia producing more rings hollow. The Saudis want $80 oil to balance their budget and help the long-term transition away from crude. This is their opportunity to pump a bit more while keeping prices at high levels.
I expect fresh momentum to the upside now but the risks are for an even faster appreciation if Iran follows through on a threat to close the Strait of Hormuz.
