Thursday, 20 September 2012

WTIC Oil - another potential red flag

WTIC Oil slipped 3.5% today to close in the $92s. We are close to breaking the broad weekly up trend since the June low of $77.

WTIC, daily

WTIC, weekly

WTIC, monthly


Today's close below the 50 day MA is pretty significant. There are certainly a lot of conflicting issues surrounding the crazy oil market. Whether its post-QE announcement depression (a case of 'post-QEAD'?), fears of Israeli action against Iran, or just an underlying weak global economy, the Oil market remains very mixed.

What is clear, we remain in a significant post June ($77 low) up trend. The monthly cycle is threatening of massively higher prices in the $150/175 range, but for now, first upside target is a daily close of $100.

Secondary upside target is to break the Feb'2012 high of $110.

Red flag for October?

The doomer bears should be seeking a weekly close <$90, although if it takes until the end of next week, that is fine too. Considering the recent weakness in the transports, could be close September with two red flags?

Deflationary pressures, despite the Fed

The petroleum based economy that we live in would certainly benefit from even a few months of Oil back in the low 80s/70s. The notion of Oil back in the 60s..even 50s, appears near impossible right now, not least with the middle east seemingly ready to explode at any time.

Long Oil, via UCO? Once the daily cycle levels out - whether its the end of this week or next, it would appear to be a very valid trade consideration, not least as a hedge against a 'Sunday night surprise' from the Israelis.

Goodnight from London