Brent opens lower as the Iran gets to bring its oil back
It was only a small gap but the move itself tool the price down to 27.67 overnight. We've had a rebound but are finding it tough to get above the 28.70 areaBrent m
Brent 30m chart
It's hard to think that anyone was still waiting for oil to open to sell the Iran news as it had been primed all week. What may be likely is that Iran had some orders lined up for the open and looking at the price action there's orders in to sell up towards 29. That's pure speculation on my part. No doubt Iran had been doing deals with countries well before sanctions were lifted
So 28.70 is the line that needs to break before we think about closing the gap. There is some scope to see a move higher and one that won't necessarily change the trend. The area around 36.00 is where we're likely to see the hardest resistance so if the market does let out some of the bearish pressure, that's where any retrace might run into real trouble
Brent daily chart
All trends need a refresher now and again and the fall from 36.00 has been swift and hard so there's a chance a bounce could show some equally swift moves.
It's not all about Iran though. Today the latest bearish news came from the JODI oil world database report for Nov which showed Saudi exports were up 4.8% vs 3.6% prior. However, output fell 0.9% vs +0.5% in Oct. It's the biggest fall in output since last July
For those itching to buy oil, there's no doubt plenty of mileage left in this game of chicken. News such as BHP last week, announcing a $7.2bn write down on their shale operations, and that they now only have 5 shale rigs running vs 26 last year is testament to that.
I'm in the Adam camp that says we are going to get a big commodity blow out. When that happens that will be the time to start scaling into longs in the commodity sector. That will mean looking at commodities themselves as well as stocks and other instruments