A sustained move under $53.61 will signal the existence of sellers revealing a bull trap. This will likely trigger a labored break with potential targets weighing $52.40, $51.29 and $50.66. If $50.66 fails as support discover the selling to extend to the main retracement zone at $50.28 to $48.83.
A sustained move over $54.00 will indicate the use of buyers. This will likely also indicate that Friday’s move was fueled by fake buying rather and merely buy stops. The upside momentum will not likely continue and testing $54.98 can be a fantasy for buyers from fuelled trade talks.
Lifting Iranian sanctions will have a significant impact on the entire world oil market. Iran’s oil reserves include the fourth largest on earth and they’ve a production capacity of around 4 million barrels every day, causing them to be the second biggest producer in OPEC. Iran’s oil reserves take into account approximately 10% of the world’s total proven petroleum reserves, with the rate in the 2006 production the reserves in Iran could last 98 years. Most likely Iran will prove to add about One million barrels of oil a day to the market and based on the world bank this can result in the cut in the crude oil price by $10 per barrel the coming year.
Based on Data from OPEC, at the outset of 2013 the biggest oil deposits have been in Venezuela being 20% of global oil reserves, Saudi Arabia 18%, Canada 13% and Iran 9%. Due to the characteristics in the reserves it’s not always very easy to bring this oil to the surface given the limitation on extraction technologies and also the cost to extract.
As China’s increased need for natural gas instead of fossil fuel further reduces overall need for oil, the increase in supply from Iran and the continuation Saudi Arabia putting more oil onto the market should understand the price drop over the next 12 months and a few analysts are predicting prices will fall under the $30’s.
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