The oil puzzle

Posted: June 6, 2016 in Uncategorized

As in February the oil was crashing and “going extinct” all of the sudden is back at USD$50.

So a new oil market rally?

Not so fast.

The rally in oil has started from some speculative moves and then a few oil disruption (the new Nigeria “Delta Avengers” terror group, the Canadian wildfires between others) helped to shrink reserves and lift prices.

But now Iranian oil production is recovering at a faster pace than expected and the US shale gas rig count has started to increase again.

In essence oil is ranging between two overlapping areas USD27 – USD 43 and then USD 38 to USD 60.

Now we are in the 38-60 area. There could be some weakness, but usually the Northern Hemisphere holiday months (July, August) give support to oil – so any decrease would be probably limited to USD 38 and the target for September could be USD 60.

As the onset of the winter month come, I presume that by end year will be back at around USD50.

In effect I see the oil as ranging between USD38 (or in a panic US32) and a top of USD60 for teh rest of the year.

But now all eyes are on the Brexit referendum

 

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