Neckline resistance: $51.80-$52.00
As we can see, the right shoulder is in progress. The rally from sub-40 levels has caught one and all by surprise. The reason for that is the fundamentals are not supportive. Just a couple of weeks ago there was widespread talk of oil market rebalancing being drowned in gasoline glut!
However, things changed all of a sudden after Saudi minister announced an emergency meeting in September and was joined by Russia in triggering speculation of output freeze. To put it briefly - Oil has rallied on slippery floors/false premise.
Gaurav Sharma, Oil Analyst, IB Times UK, detailed reasons for why he he believes the oil market rally could be short lived.
Check out the segment titled "Do not trust the Oil market rally - IB Times" here - https://www.youtube.com/watch?v=sFlUd-OXMPY
Macro show at - http://www.tiptv.co.uk
“We've switched from a bear market to a one, but do not trust the oil price rally; its being sold on a false premise which is why profit-takers are all over oil since start of the week”
“Chances of oil producers agreeing to a production freeze appear slim, and even if they do - it'll be a phoney action as Russia & Saudi Arabia are pumping over 20m bpd between them”
“Even for a short price uptick, the market would need a real terms cut of 1m bpd - all that'll do is support fringe North American plays and we'll be back where we are”
“In any case, data suggest North American oil explorers have adjusted to the new normal of a $40-50/bbl oil price. That’s the range we're most likely stuck at for 2016”