Bottom Is In For Oil…For The Time Being

rollandthomas (74)in #investing • 5 years ago (edited)

Oil is coming off of a 20%+ decline in price in the month of November, the biggest monthly fall since October 2008, but is off to a great start in December. I think the bottom is in on oil for the time being. Last week, the buyers refused to see oil close below $50 level.

NOTE: that is now the line in the sand.

In additional, on Monday we had both a daily and weekly gap higher and in the process closed above the all last week’s daily candle closes.

But I believe the bottom is in on oil not only because of what I’m seeing on the charts, but the news that came out this weekend and I’m not talking about the US-China new trade tariffs suspension.

Oil prices settled with a 4% gain on Monday as optimism ahead of an OPEC meeting grew after Russian President Vladimir Putin said he and Saudi Crown Prince Mohammed Bin Salman agreed to extend output cuts on the sidelines of the weekend G-20 summit.

Russia’s Putin made the announcement in a press conference late Saturday, after a meeting with Bin Salman, though he said there was no final decision on volumes. The comments come ahead of the Thursday-Friday OPEC meeting in Vienna, in which I think they will announce an oil output cut.

Another big boost for crude came after Sunday’s announcement by Alberta Premier Rachel Notley, who said she has ordered oil companies in the Canadian province to cut production by nearly 9% next year due to a glut in Canadian oil. Canada is the fourth-largest oil producer in the world.

So where is oil prices headed next, lets go to the charts to find out?

The bulls saw an encouraging sign when price broke the wicked down trendline yesterday. This was the first thing that needed to happen in order for price to move higher.