Brent crude oil has been moving steadily upwards over the past few weeks. We speak with Craig Erlam, Senior Market Analyst for OANDA about the commodity and whether or not it can go higher. It recently pushed through the $61/$62 a barrel price. Craig tells us that it may not be due to the Saudi Arabian effect.
The media has been keen to pounce and claim the positive move on Brent has been caused by Saudi Arabia. However Craig thinks that it is just a slow market, and that people are looking for excuses. Saudi Arabia is OPEC’s biggest producer. 1 in every 9 barrels is Saudi. Political uncertainty will most likely push doubt on the oil price. However there have been no signals yet that it will have an impact on oil output. So therefore shouldn’t be an impact on the Brent price.
Looking at the technical perspective we have broken through the 200SMA. We passed the prior zone of support and resistance. It is now plausible that we can move towards $67.50/$70 a barrel. Also the 233SMA comes in to play, which brings in a nice psychological level.
Craig tells us that this is a supply and demand story. The market is moving back towards balance. The Oil Rig count in US is favourable for a rise. Global demand for oil is still rising. Craig tells us that there are plenty of other stories in the oil market apart from the Saudi Arabia effect.
On the other hand if we do see a retracement the market could return to the $55 area. When we look behind us there are a number of resistance levels that we had to break through to get where we are currently, and these still stand as the areas of resistance and support. Below $60 there is a heavily congested zone of support and resistance. Craig argues that there are no signs that is materializing in the near term.