Oil has been very volatile in recent months.After making multi year lows,crude bounced back to make $ 52.73 high .News report suggested that the temporary shut downs re opened and there was a reversal in pattern of shale gas drilling activities.Oil had a dramatic fall once again till $ 39.19. Iran is also close to pre sanction levels of production .Data coming out of China recently suggests the economy may have stabilized but with a negative bias.
So does all the data point towards a pro longed period of bearishness in the oil market?
Recently there was on the wires that a big financial institution predicted a price range of $ 30 over a period of next 4-6 months.But with the change in momentum of oil could we safely say that crude can re-test these levels in the near future specially after correcting from the highs by as much as 25%? From a purely trading perspective and technicals it looks a bit far fetched in nature.But the fickle nature of oil and sharp price movements can make us skeptical.The change in fed stance can be negative for oil.
Recent rallies in some base metal suggest some liquidity chasing commodities and there has been a price recovery.Although the demand supply dynamics is skewed against oil but easy liquidity can put a lid on downward price pressure.With government across the globe supporting their respective economies with stimulus measures there is easy money.Recently Saudi Arabia’s oil minister claimed that demand will exceed supply by year end which is a positive for the oil prices.
Meanwhile we will wait and watch how the oil prices behave this year and keep our readers updated !