Speaking of breaks, the 2015 low is no more in Brent crude oil
Officially it's still the 2015 low now we're in 2016 but you know what I mean
South we go once again in oil as Brent slams through 36.00 to 34.81. Even more bearish ducks have lined up behind this commodity as risk aversion increases, Chinese worries increase, and tubsy in North Korea has a belated New Years fireworks party
The break here could be substantial as it puts us within the realm of hitting $30
Brent crude monthly
The picture isn't entirely clean down here. We have an area of consolidation through 2000-2004 so we're likely to find some congestion from here on out. 31.70/32.00 was a level that largely contained that consolidation period so it stands out for me as a level to watch.
On the other side of the pond, WTI is looking towards its 2015 low around 34.25 and has come as close as 50 ticks away from it today. The API data overnight had about as much an effect as a fart in a strong wind. The crunch for WTI comes in around the mid-33's and 32.40
WTI monthly chart
Should oil (particularly WTI) get down to some of these lower levels then it's going to become very interesting for producers who will really start to feel the squeeze. Both Adam and I are expecting big trouble in the energy industry this year, especially if prices continue to plummet. One date that might start happening will be in April when producer finances get assessed by lenders. If lenders start pulling the rugs out from under producers it could be a massive tipping point for the US industry
One word of note for the DOE data later. The API numbers showed a build in Cushing. That may be down to the recent flooding and the potential for refineries and pipelines to have been shut down. I ran a story on it New Year's eve so it's something to factor in when we get the DOE numbers later. At the moment expectations are for a 645.55k build overall and Cushing is expecting a build of 790k
