Oil prices exploded higher over the past week as both WTI and Brent rose by over eight percent, the most since late 2016, notes the research team at BBH.
“The market shrugged off the larger than expected US crude build, and instead went with the geopolitical story and output restraint in OPEC and non-OPEC that has seen global stocks approach the objective of the five-year average. The geopolitical concerns include a possible escalation in Syria, the harder line that is emerging that could lead to new sanctions on Iran, and loss of output in Venezuela. Brent’s premium over WTI has widened to most in three months.”
“The technical indicators had warned of the risk that support near $62 would break, but it did not, and those technical indicators have turned higher. It shot through the 50% retracement objective of the decline that began in 2014 (~$66.90), which had held back the continuation futures contract this past January. The next retracement objective is near $76.50.”
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