Geopolitical Turmoil In The Oil Market
Today’s Spotlight Market
Tensions in the Middle East escalated quickly over the weekend following Iran?s execution of a Saudi cleric. As of this writing, Saudi Arabia, Bahrain, and Sudan have broken diplomatic relations with Iran while the United Arab Emirates has recalled their ambassador from Tehran.
Fundamentals
Crude Oil prices, which had been on a steep decline recently, rebounded as the uncertainty spread throughout the Middle East. Saudi Arabia has been aggressively pumping oil, even with the lower prices. This strategy has drawn opposition from some OPEC members, including Iran. Volatile trading in Crude Oil followed the news as the markets opened for the first session of 2016. Prices first spiked and then retraced as Mideast tensions vied with news on a slowing Chinese economy. The full sized crude contract is a very large contact with each .01 movement reflecting a $10 movement. Traders need to remain alert even during the typical lulls that occur during holidays.
Technical Notes? -? View Today’s Chart
Turning to the 3 month continuation chart, most of the signs are still showing a bearish trend. As of this writing, the 20 day SMA is still providing resistance. The 20 day SMA is still far below the 50 day SMA. $35 is still a support level, if prices break below that level, the next support level might be the $25 level, which was a previous level back in the early 2000?s. 14 day RSI is a relatively neutral 53.64.
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