Oil continues marching higher

My current read of the Brent Crude Oil price is….

if it closes above $70, then there is clear air to the $74-$76 region, while probability of a spurt to $80-$82 remains, such a move would swing the pendulum into extreme territory.

and then we’ll see OPEC start to increase output.

Basically, traders are waiting for a break above $70 and if they see it, then watch them pile in.

for context though, going Long Oil today (currently trading at $69.50) is a marginal bet. I see the risk/reward equation as being either $6 up or down.

After all, Brent Crude already seems stretched on various measures after having tripled from its $16 low in April 2020. Establishing a new ‘long’ position at this moment is akin to squeezing the last 10% out of a trade.

Keep in mind, that markets tend to move in the direction where they can inflict the most damage……..and a $80 oil price would hurt more (politically and commercially) than if fell to $50.

March 12, 2021

by Rob Zdravevski

rob@karriasset.com.au

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