Friday, April 19, 2013

Crude Oil - Breakdown on the Weekly Chart

crude 19 apr

Crude Oil has dived almost 20 percent in two months,  the first time since July crude went below $100 a barrel . The latest dip was part of a broad sell-off in commodities as well as fears of a global economic slowdown. Oil prices climb usually  higher when economic activity picks  up. I  think this time may be different.

First, supply. America’s supply  shale gas and oil has been outstripping estimates. Eventually, the American energy revolution may spread gobally.

Second,  Alternative energy has been found after years of high crude prices. New vehicles worldwide are more fuel effiecient. China’s growth is moderating,  moving away from oil-intensive heavy industry and construction towards consumption and services.

Third, cheap natural gas is replacing crude’s monoploy in transport fuel. Energy consumer are currently paying $95 for a barrel of oil, can get the same amount of energy from American natural gas for around $25.

The change in dynamics may continue to cause crude to trade at or below $90 even if global growth picks up.  I stay bearish on oil related stock like Ezra, Keppel and Semarine

All posts and charts are for educational and illustration purposes only

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