Oil was a touch higher today, but remains below the ultimate psychological level of $100. All those who are on the 'US slipping into a recession in Q3/4' waggon, should be wanting to see lower oil prices as a sign of underlying weakness in the global economy.
We have a clear bear flag on the weekly cycle, although in price terms, its to be dismissed if we put in a few closes over $100. Indeed, the bears should want to see prices level out here, with an attempt to break the flag no later than mid September.
First target would be $85, that should confirm the flag, and open up a test of the recent low of 77.28.
If we can break into the low 70s...that should allow $60 across a number of months. That could take until late spring 2013 though.
An unreliable commodity
Oil remains a real wild card though. Not only is the price rigged by the cartel of OPEC, and greatly affected by basic demand/supply aspects, there is also the never ending chatter of 'imminent middle east conflict' that often sends prices higher.
One final thing, is the issue of further QE. How can the Bernanke (or his successor - if Romney wins) do QE with Oil already close to $100 ? Oil back over $125/140 would be a very serious problem for the struggling western economies. I would guess, the Fed would be more than happy to launch new QE with Oil in the low 60s. Who would complain then?
Goodnight from London
ps....to conclude tonight..a word from his highness....