Oil has been coming under serious pressure in recent times, losing just over 20% in market value in 4 and half weeks. Over the past few months, oil traders were gearing up for further sanctions to hit Iran, in particular, their ability to export oil. Prices have built up but with waivers being granted to big buyers of Iranian oil it seems production being completely strangled has diminished. Couple this with weaker inventories and a surge in US shale production it seems there’s a lot more supply than previously thought.

Back in the second half 2014 and early 2015 the price of oil dropped a staggering amount, from the highs of around $107 per a barrel down to lows of $41, from here there was a small retracement which saw prices reach the $62 level before selling off again reaching lows of $26 in Jan 16. Prices have rebounded from here overcoming the $62 zone in Dec 2017 and building support here in March/April 2018.

It’s interesting to see that we are now back down at this zone ($62) currently. Back in Feb, there was weekly support around $60 and bulls would not want all the recent hard work to go to waste and see prices fall back to levels trading earlier this year. Further moves south would see prices approach the 50% fib at $59.51 (Jun 17 low to Oct 18 high) and then a big 38.2% Fib at $57.45 (Feb 16 low to Oct 18 high). Sub $58 is a break of a possible trend support which consists of the Feb 16 low and Jun 17 low, it would be very weak if we pushed through here but there were strong buyers from where we broke up in Oct 17 at $55 which also coincides with a 61.8% at $55.41.

Everything pushing skew to the bearish side, the strong selling on the 23rd October did force us out of a trend channel that has been trading fairly neatly since June 17. Between 63.43/64.29 is a zone that held the June and August lows and bulls may get a little encouragement if this was retaken. From here it would be the next task of getting back up into the trend channel and tackling 66.00/.65 where we had our latest breakdown.

Nymex Crude Daily Chart – Trend Channel Break

Nymex Crude071118