When we first wrote about crude oil back in July last year, "climate chaos" that was seemingly inevitable according to US Secretary of State Mr. John Kerry and French Foreign Minister Mr. Laurent Fabius back in May 2014, did not manage to pump oil prices back up.
The double bottom chart pattern on the weekly, was just a "double bottom" with no significant price reversal seen. Instead price ramped through and broke the two bottoms without any hesitation, to reach as low as $37.25/barrel in the last week of August, amid global supply glut projected through Iran's supply after the global sanction was lifted. Then price retraced to as high as around $50.65/barrel in 7 weeks before thrusting down again to reach as low as around $25.75/barrel early last month.
Nevertheless, we believe that oil price is stabilizing, as supported by the look at oil futures. The highest bid in the next 12 months was for December 2017 contract at $44.27/barrel, with increasing bid pattern with a break in May and August 2017 onwards, where market expects consolidation.
Further look at the latest commitment of traders, suggest that speculators are more bullish as their net longs increased.
Right now, we see the price of oil is in the limbo, as OPEC and non-OPEC members try to stabilize the market by agreeing to cut production. This is going to be more that just a simple 'agree and cut' solution as Iran said they support any effort to stabilize price but are not willing to participate. Looking at price structure, we expect to deploy our range strategy as this drama unfolds.