In my previous post on crude oil was written on August 2nd 2016, I wrote: “crude oil will close this year between 35$ to 42$ while next year can be a bull market if things go well.” Yesterday crude closed at 58.59$ approx. 50% higher from last year, although the bull market did not shape out as expected.
If we look at given chart for crude, we can see a strong resistance at 60 USD. This has happened despite so many negative news like the cost of production for shale oil falling below 40$, electric vehicles being a new rage, the US becoming a net exporter of oil etc.
Any breakout above 60 USD looks difficult, I think crude will consolidate between 50$ - 60$ before any further breakout which can push the prices to 70$ – 77$ level. I think the most likely reason for the breakout will be further deterioration in the geopolitical situation in major oil-producing countries.
If we look at the long-term chart of crude, I think the bear market in crude oil started in 2008 and we are already into 10 years of bear market. I don’t think we are going back to 100$ levels anytime soon but crude is very likely to consolidate and trade between 50$ to 77$ depending on the geopolitical situation. I continue to maintain an upward and positive bias on crude oil over next 2 years with short-term correction looking imminent.
