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Brent - double bottom??


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No chance this is the bottom. Some chance of an Aug/Sept rally but the headwinds are terrible for oil.

Using WTI as the benchmark you might hope for 45-50 but it'll go back to 40 afterwards and probably into the 30's. I don't think it'll hit the $30 predictions as too many people will start to buy long-term longs. You might get $32 optimistically, but more likely $35-$38.

Much lower and it's too painful for too many, both medium term, and long term. If it went under $35 for very long it's the best bet ever as it kills long term exploration spending, ignoring US Shale which is more flexible, for that reason you'll get too much money trying to pile in covertly and overtly below that price (it's really $40 imo for that breakeven point but $35 is where it becomes pushing it too much).

Best hope for oil is a collapse in the dollar as it's still pretty strongly correlated. This being a signal of weakness now when a dollar rally hammers oil and a dollar follow leads to a weak rally in oil.

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  • 2 weeks later...

 Oil is a very tough market to call at the moment.  So many variables to take into account.  I personally dont think OPEC will cut production when they next meet.  

 

I think the significant factor accross all markets will be the US FED rate hike, which I will stick my neck out and say will come this month.  Although while I think they will rise this month, the NFP figures and other economic data released before then could change things.

 

The daily brent chart looks quite bullish I think.  Obviously starting from a lower low than March's last dip.  But there is scope for a secent rise.  Key will be whether there is a similar pattern in the rise.  The daily chart seems to be in the process of forming a similar pattern.  I would expect some further consolidation and profit taking before a rise up.  Although if the downtrend continues I would certainly expect to see the previous lows tested.

 

chart.png

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Lots of variables but I've had a lot of success calling this one in advance (whether by luck or judgement).

Currently a tougher call, so I've got no positions on it, as my preference is it to follow my original prediction which was to get under $38 before rallying to $45-50 and then back down again, as it's followed it like clockwork so far. Therefore if it gets back down to $40 I'll start to consider longs again but scale in slowly. This last dip was always the tougher part of the prediction to happen (hence no positions).

(WTI obviously)

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