A sustained move under $53.61 will signal a good sellers showing a bull trap. This will likely 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 into the main retracement zone at $50.28 to $48.83.
A sustained move over $54.00 will indicate the existence of buyers. This will also indicate that Friday’s move was fueled by fake buying rather and buy stops. The upside momentum is not going to continue and testing $54.98 is often a pipe dream for buyers from fuelled trade talks.
Lifting Iranian sanctions will have a significant effect on the world oil market. Iran’s oil reserves are the fourth largest on earth and they’ve a production capacity around 4 million barrels each day, making them the second biggest producer in OPEC. Iran’s oil reserves be the cause of approximately 10% with the world’s total proven petroleum reserves, at the rate from the 2006 production the reserves in Iran could last 98 years. Almost certainly Iran will prove to add about One million barrels of oil every day on the market and based on the world bank this will likely result in the cut in the crude oil price by $10 per barrel pick up.
Based on Data from OPEC, at the outset of 2013 the biggest oil deposits will be in Venezuela being 20% of global oil reserves, Saudi Arabia 18%, Canada 13% and Iran 9%. Due to the characteristics from the reserves it is not always easy to bring this oil for the surface given the limitation on extraction technologies and the cost to extract.
As China’s increased need for natural gas as an alternative to fossil fuel further reduces overall need for oil, the rise in supply from Iran and also the continuation Saudi Arabia putting more oil on top of the market should see the price drop over the next 12 months and a few analysts are predicting prices will fall under the $30’s.
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