A sustained move under $53.61 will signal the existence of sellers which indicates a bull trap. This may trigger a labored break with potential targets weighing $52.40, $51.29 and $50.66. If $50.66 fails as support then look for the selling to extend in to the main retracement zone at $50.28 to $48.83.
A sustained make room $54.00 will indicate a good buyers. This may 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 is really a fantasy for buyers from fuelled trade talks.
Lifting Iranian sanctions have a significant effect on the world oil market. Iran’s oil reserves are the fourth largest on earth with a production capacity of approximately 4 million barrels every day, causing them to be the second biggest producer in OPEC. Iran’s oil reserves account for 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. Almost certainly Iran will add about 2million barrels of oil per day on the market and based on the world bank this will lead to the lowering of the oil price by $10 per barrel next season.
According to Data from OPEC, at the start of 2013 the most important oil deposits come in Venezuela being 20% of global oil reserves, Saudi Arabia 18%, Canada 13% and Iran 9%. Due to the characteristics from the reserves it’s not always easy to bring this oil for the surface due to the limitation on extraction technologies and the cost to extract.
As China’s increased requirement for gas rather than fossil fuel further reduces overall demand for oil, the increase in supply from Iran as well as the continuation Saudi Arabia putting more oil on top of the market should start to see the price drop in the next 1 year plus some analysts are predicting prices will fall under the $30’s.
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