A sustained move under $53.61 will signal the existence of sellers which indicates a bull trap. This will likely trigger a labored break with potential targets coming in at $52.40, $51.29 and $50.66. If $50.66 fails as support then look for the selling to extend in the main retracement zone at $50.28 to $48.83.
A sustained move over $54.00 will indicate the use of buyers. This can also indicate that Friday’s move was fueled by fake buying rather and just buy stops. The upside momentum will not continue and testing $54.98 can be a pipe dream for buyers from fuelled trade talks.
Lifting Iranian sanctions have a significant impact on the globe oil market. Iran’s oil reserves would be the fourth largest in the world and they have a production capacity of about 4 million barrels a day, making them the second biggest producer in OPEC. Iran’s oil reserves take into account approximately 10% with the world’s total proven petroleum reserves, at the rate in the 2006 production the reserves in Iran could last 98 years. Most likely Iran will add about A million barrels of oil a day on the market and according to the world bank this may resulted in lowering of the crude oil price by $10 per barrel the coming year.
In accordance with Data from OPEC, at the start of 2013 the greatest oil deposits will be in Venezuela being 20% of world oil reserves, Saudi Arabia 18%, Canada 13% and Iran 9%. Due to the characteristics of the reserves it is not always possible to bring this oil for the surface in the limitation on extraction technologies and the cost to extract.
As China’s increased demand for propane instead of fossil fuel further reduces overall demand for oil, the increase in supply from Iran and also the continuation Saudi Arabia putting more oil onto the market should understand the price drop within the next 12 months and several analysts are predicting prices will get into the $30’s.
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