Recently, Light Crude has seen a dramatic 35%+ increase in value. As the current price continue to flirt with $40 per barrel, the likelihood of a further price rise is on everyone’s mind. With recent lows near $26 per barrel, what is the possibility that oil will form a base above $30 and attempt a rally?
Historically, the 2009 low price for oil was $33.20. This level should be viewed as a key level of support for current price action. The recent price rotation below this level is a sign that oil prices are under extreme pressure in the current economic environment with a supply glut and slower than expected demand.
It is my opinion that the price of oil will continue to reflect the supply/demand aspects of the global markets in relation to global economic activity. Thus, my analysis is that Oil will likely attempt to retest support, near $30 or below, in the immediate future in direct relation to continued supply production in conjunction with slower global demand.
(Baltic Dry Index Chart – LongTerm)
The BDI Index continues to attempt to push to new lows. This is a strong indication that global exports and international demand from consumers and business is continuing to diminish.
