Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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Clive Maund: OIL UPDATE - HAS THE ADVANCE FINALLY RUN OUT OF STEAM?...

* May 30, 2016

It still looks like oil is topping out here at about the $50 level after its substantial recovery uptrend from its February low. While we cannot be sure until it breaks down from its uptrend, the chances of its doing so soon look high for various reasons. One is that the current intermediate uptrend has been going on for a long time now and has resulted in a persistent overbought condition. Another is that it is quite some way above its 200-day moving average, which although it has turned up, is still only rising gently. Another is that it has arrived at resistance at the upper boundary of a trading range that developed last Fall. Still another is that its latest COT looks bearish, with Commercial short and Large Spec long positions being at their highest for about a year. Finally, the broad market looks ready to roll over, after its rally up to resistance of recent days, and if it does it is likely to take oil down with it, probably against the background of a continued rise in the dollar.





The 1-year chart shows that the advance has brought Light Crude up to a zone of significant resistance where it appears to be stalling out. This is a good point for it to turn down again, probably in tandem with the broad market…



In the light of what we are observing on these charts, the 22nd May article in ZeroHedge entitled Something Stunning is Taking Place off the Coast of Singapore makes very interesting reading. The conclusion is that with the contango narrowing, the gigantic offshore glut will come ashore and the oil price won’t just drop, it will crash.

http://www.clivemaund.com/article.php?art_id=3819

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