Oil Prices Approaching The $50 Level, Now What???
The last time I spoke about oil, which was one month ago, I talked about price was about to penetrate the monthly demand at $42 and the fact that prices of oil is truly a supply and demand equation.
Oil Prices Breach The $50 Level, Now What???
Since that time price penetrated the monthly demand, stopped at $42.34 and has since rallied 17%.
Nothing has changed in the global economy in two weeks, it’s decelerating, but what has changed is the supply and demand equation for oil.
Saudi exports in December fell by about half a million barrels per day to stand at 7.253 million bpd, according to tanker-tracking data from Bloomberg. January marks the beginning of OPEC’s agreement with 10 other oil-producing nations, including Russia, to cut production by 1.2 million bpd. A Wall Street Journal report stated that Saudi Arabia is planning to cut crude exports to around 7.1 million barrels per day (bpd) by the end of January.
What’s helping oil is the rally in the US stock market as well. For the past three months, oil and equities have been correlated. That makes sense, strong economy, equates to more demand for oil and vice versa. So with the equities markets up almost 3% in 2019, where is oil headed next, lets go to the charts?
The price action in the white rectangle represents filled orders.
I'm not say price won't pause here, but the chart is suggests price will move the next level of sell orders at the daily supply at $57.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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I also think that commodity prices will start to be lifted by overall inflation pressure that is long overdue in an economy so filled with cheap capital and money supply.
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They all will if the US dollar continues to drop.