With WTI falling through $50 with little more than a murmur, Brent is the next one that could have a look at the round number.
In normal times oil is a very good technical market but like all markets, when the fundamentals take over, the tech stands for little.
Still, nothing moves in one direction forever and so looking at the very long term tech levels can give us some points to look at trades.
Brent is yet to hit $50 so the number may have a say in things yet. Just below that is the long term trendline at 48.70
Brent crude monthly chart 06 01 2015
After that it’s a fairly big drop to the next possible level of support around 41.60 to 39.35 and the Jan, Feb, Mar 2009 lows. after that we have the Dec 2008 low at 36.20 which is also a level of prior support going back to the first half of the 2000’s.
WTI is looking at a similar picture with the trendline at 45.37 but has a stronger triple bottom between 32.40 and 33.55 through the Dec 2008, Jan/Feb 2009.
WTI monthly chart 06 01 2015
One thing to remember before thinking about buying oil for a bounce back to 100 or wherever is that we spent nearly 25 years trading between $15-40 and have only seen the moves up to 150 over the last 10 years, and a lot of that through the GFC. With the amount of oil still coming into the market we could find ourselves trading a similar range for a considerable time. I’m not dismissing the fact that we won’t get any big bounces but it’s probably wise to lower expectations of where bounces could go. If we get down to the low 40’s or 30’s then taking a long term position as far out in futures as you can get could be the big winner.
