The pullback in oil has either just ended, or will end after one more leg down. In my opinion, it is a higher probability that the bottom is in and that we will begin a new uptrend from here. However, there is the potential for one more leg down, which I would expect to find support along the bottom of the trend channel or at the 0.618 retrace at about $56 if it were to occur.
Oil opened 3-3.5% higher on Sunday evening after OPEC announced that it would be cutting production by 1 million barrels per day. However, oil has pared some of those gains, at the time I am writing this it is 2.3% higher. Some view the production cut as bullish because less supply = higher prices (I am in this camp), but the bearish take is that oil demand is falling sharply due to a global recession and that this cut confirms that view.
The thick black support line has served as a strong support area for more than 2 years, and I would be surprised to see oil surrender that base.
The sentiment around oil is very bearish and funds are very underweight/short the sector. In my opinion, this is a very good time to add oil stocks if you have a 12 month time horizon.
Oil opened 3-3.5% higher on Sunday evening after OPEC announced that it would be cutting production by 1 million barrels per day. However, oil has pared some of those gains, at the time I am writing this it is 2.3% higher. Some view the production cut as bullish because less supply = higher prices (I am in this camp), but the bearish take is that oil demand is falling sharply due to a global recession and that this cut confirms that view.
The thick black support line has served as a strong support area for more than 2 years, and I would be surprised to see oil surrender that base.
The sentiment around oil is very bearish and funds are very underweight/short the sector. In my opinion, this is a very good time to add oil stocks if you have a 12 month time horizon.
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Bottom has held. Up we go.
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Likely to pause for a breather soon, but large scale pattern is fully intact.