Malcolm Graham-Wood
Independent Analyst
What was a bad week for the oil price, with WTI falling $3.55 and Brent $3.81, ended with the terrorist action in Paris on Friday night. It would be easy to say that this has heightened the geopolitical environment, and it is no doubt true that military action will step up in the area, but for the time being nothing has changed on fundamentals. The key numbers for the crude market are quite simply based on an oversupply of oil at a time when demand is flimsy at best. The IEA report was the last to come out on Friday and whilst it showed a bigger call on Opec of 31.28m b/d, and also bearish on non-Opec supply growth, these alone do not a bull market make.
The Baker Hughes rig count was down 4 units overall but oil actually rose by 2, again nothing to change much and oil fell and at these levels the chartists who have been getting quite excited are no longer so frisky. Indeed, from holding on to bullish trends they have fallen through moving averages and are looking pretty exposed. My technical guy is now most worried about levels of around $38 for WTI and $42 for Brent, not a million miles away. G20 in Turkey may well actually be of some use, see Marcus Ashworth for a good analysis of the situation paying particular regard to the position of Putin who may just be the key piece on this particular chess board.
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