Oil Market Update - good buy spot if Fed continues to inflate...

originally published Friday, August 27, 2021

Printable Version

All Latest Oil Market Update

Oil’s recovery from its April 2020 lows is extraordinary given the damage to the world economy inflicted by the New World Order under the cover of a bogus health scare. The reason for this big recovery is a combination of powerful vested interests who want the oil price back up coupled with massive money creation on an epic scale by the Federal Reserve in particular to the tune of many trillions of dollars. Whilst much of this newly created money has been gifted to NOW favored cronies and crony corporations, it is of course rippling through the economy and creating massive inflation made worse by the fact that many workers are being paid to sit at home on their backsides doing nothing.

We can see the magnitude of the recovery in oil from its freak April 2020 general crash low on its 5-year chart and how it hit the target at the resistance at its 2018 highs as predicted in the last update posted in April, which has turned it back, although due to ongoing money creation this may not be the final high. (Note that due to technical problems whilst travelling, most of the charts in this update were added on the 27th August).

On the 6-month chart for Light Crude (chart for 16th) we see that after its reaction back from the start of July, it has arrived at strong support in an oversold state within an uptrend that must stilled be classed as ongoing because the 200-day moving average is continuing to rise steadily some way beneath.

The long-term 16-year chart gives us a useful overall perspective and on it we can see that if oil should succeed in breaking above the resistance in the $75 - $77 area that turned it back around the start of July, it is likely to advance into the block of quite heavy resistance roughly in the $90 to $110 zone. The strong Accumulation line shown at the top of the chart makes this more likely.

As for oil stocks, we can see on the 5-year chart for the XOI oil index that it ran into a zone of quite heavy resistance by the end of June, which turned it back in tune with oil itself. We should note that there is a potential Head-and-Shoulders top forming just visible on this chart above a line of support in the 950 – 960 zone. Holders of oil stocks should be aware that this support needs to hold, as if it doesn’t a breach of it could trigger a sharp selloff. That said, if our observations for oil itself hold true then the sector should take off higher again from here and the potential top pattern abort.

We can see the key support line for the XOI index in the 960 area more clearly on its 6-month chart where on the plus side a potential small Double Bottom could be forming with its July low and the rising 200-day moving average is coming into play beneath that is supportive of renewed advance.

In conclusion, oil looks well placed to turn higher into another upleg, but this depends on continuing market confidence that the Fed will create more cash to throw at propping everything up and driving asset prices higher.

End of update. Note that most charts in this update were added on the 27th August, due to earlier technical problems.