Summary:
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Oil falls below 84.00 as indices sink
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Bearish engulfing candle could be forming on D1
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World’s biggest oil traders offer opposing views on future prices
There’s been some notable weakness in stock markets this afternoon with both European and US indices coming under pressure. This risk-off move can be seen elsewhere with the Japanese Yen rallying and also Oil moving lower. The declines in Oil are particularly noteworthy due to the market falling below Tuesday’s lows and a close around these levels or lower would see a large bearish engulfing candle printed on D1. The market gapped lower over the weekend but this dip was aggressively bought, however the move higher stopped short of recent peaks of 86.72 and the market is now back under pressure.
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Oil has erased yesterday’s gains in their entirety today, and a large bearish engulfing candle is forming on D1. Source: xStation
While the market remains comfortably above the breakout level of 79.75 the fundamental picture for crude is a little muddied at present. The break and strong subsequent rally was based in large part on an expected supply shock from Iran as US sanctions begin to take hold. However, this narrative was challenged over the weekend with some reports that the US would allow other countries to circumvent these sanctions and still buy oil from Iran. This unclear fundamental picture is evident amongst even the biggest and best oil traders in the world.
The Oil & Money conference today saw Ian Taylor, chairman of the world’s largest independent energy trader Vitol, state that he expected prices to eventually fall towards $65 a barrel, due to no shortage of crude in the market and early signs of weaker demand. In contrast, Jeremy Weir of Trafigura, a long time rival of Vitol, said at the same event in London that he expects to see oil prices hit three figures before the recent rally will fade.
On a H1 chart a possible head and shoulders etup may be forming with the recent highs around 85.30 a possible right shoulder. The neckline for this potential setup may be seen at 82.68 - the low of the week. Source: xStation
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