Only a couple of days ago we drew the attention of our subscribers to the fact that oil is ready for a sharp movement. And this movement has already happened. Moreover, Brent oil is rapidly approaching $50 per barrel. Its breakthrough can further accelerate the upward momentum.
The price cannot stand in the range forever, which lasted for six months. Finally, the corridor is broken through upwards. Black gold is rising in price amid growing optimism that the recent breakthrough with the Covid-19 vaccine will lead to a rapid recovery in global energy demand as early as next year.
What is the problem then?
The problem is that all this could be a huge bull trap. Nowadays, oil purchases by speculators are based on emotions. As you know, most of the time speculators are wrong. And the market punishes them over and over again. The very strong punishment will be not just to return the price of oil to the previous range, but to break through its lower limit, with a further drop to $30 per barrel.
What are the prerequisites for this? Actually, there are a lot of them, here are just a few:
– Continued growth of oil product inventories in the USA
– The global economies are slowing down due to the coronavirus pandemic right now, which is dramatically reducing demand for oil.
– Absolute uncertainty in connection with the next OPEC meeting
– Risks to the oil price in the face of potential sanctions lifting from Iran
– And of course, an increase in oil supplies in excess of agreed quotas by OPEC+ countries, amid growing problems with their budgets.
If 2-3 points from the list above coincide at the beginning of 2021, the price of oil will drop significantly. And if 4-5 coincide, it will be the ‘perfect storm’ for the black gold market.
What awaits us today?
08.00 Consumer confidence index from Gfk in Germany for December
13.30 Report of the ECB Monetary Policy Meeting
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