Thursday, October 19, 2017 New York : London: India: Tokyo:

 

VIEW ON CRUDE OIL

 

07-02-2012

 

Major crude oil benchmarks (WTI & BRENT) continued to move in opposite directions. WTI crude oil slipped amid talks of IEA's downgrade of its 2012 demand forecast while Brent crude surged on exceptionally cold weather in Europe and global supply constraints after sanctions on Iran.

Brent futures rose for a fifth straight session and touched a six-month high of $116 and WTI crude oil February futures currently trading $96.62, continuing its downtrend from January. In January it touched high of $103.74 as The US deepened sanctions on Iran and EU announced to impose embargo on Iran's oil.

The gap between WTI and Brent crude oil prices widened further with the spread falling to -$19.02, the lowest level since November 2011. Two main reasons are abnormal weather in Europe and intensification of tensions between Iran and the West. Apart from Iran, disruption of oil production in South Sudan and Nigeria increases risks in oil supply.

Oil production in South Sudan remained suspended amid disagreements on oil transfer fees and Protests in Syria and Yemen have kept oil production in the 2 countries offline

Asian imports of West African crude oil will hit an all-time high in the first quarter as purchases of Iranian oil decline and as Chinese and Indian refiners build stocks from alternative sources.

In coming months, crude oil faces more volatility an account of fears appeared in Europe as Greece is due to take more efficient measures and mounting tension between Iran and the west.

Technical Outlook

Crude prices are in down trend & fell to 1 ½ month low to $95.44 level on 2nd Feb after that immediately recovered to $98.03 level.

On the downside, below 95.44 will bring another decline but expect strong support from $92.50 level as shown in the chart.

The prices are in the formation of bearish wedge pattern and the ending of this wedge might pull back prices to the upside for a test of $ 102 resistance.

 

Expected Short Term Range: $ 92.50 - $ 102

 

 

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