Oil is about to mark the 4th consecutive week of decline, closing on a key level of support – already a resistance. There is a specific reason for today’s sharp decline and it will certainly not affect the price just today. Saudi Arabia and Russia, who backed the abstraction program, have sharply changed their mining policy and are currently pushing to raise the upper limits to full-scale mining. In words, the agreement continues to receive support from a large portion of OPEC’s 24 members, but a massive increase in yields is now being observed, last seen when its price was around $25- $30. In other words, the race for who will pump and sell more oil starts. If our story is to be measured, then we can very soon expect a strong collapse of black gold.
Chart: Used with permission of Bloomberg Finance L.P.
Trader Petar Milanov