🛢️Is the 12 year oil bear market coming to an end?🛢️
It looks like the lockdown may have been what oil needed to take oil out of its 12-year bear market.
Oil has been trending downwards for over a decade, with sharp sell-offs pointed by the yellow arrows. The graph shows a very brutal bear market for oil.
The lockdown did not help, reducing the demand for oil so much the price went negative.
But was this the catalyst oil needed to breakout into a new bull market?
Since there was nowhere to store oil, producers started shutting down wells, shutting down well is very expensive, and re-starting them is also very expensive.
Data shows that the amount of oil coming out the ground now is slowing as wells are turned off, and some will not come back online again.
A wave of US shale oil producers filing for bankruptcy is rising as we speak, another supply shock.
Demand may not even need to hit pre-covid levels to enter a new bull market if producers have over-cut and there is not enough supply to meet new demand.
If inflation hits the streets, that is another bullish factor for oil.
Right now there are too many unanswered questions and the chart for oil does not look good at all, but we may be starting a new bull market if the above holds true and impacts the supply of oil.
The first level of resistance is $43, we are far away from that, it’s hard to work out support as prices have not been this low for over two decades, based on the last 3 monthly candles it’s around $17.
The RSI is not showing a lot of momentum, and things do not look good for oil in the coming months.
If you like this idea, please view my monthly ideas on Gold, Bitcoin, S&P500 and GDX. I provide a macro technical analysis combed with market fundamentals to see where price is heading next.
Oil has been trending downwards for over a decade, with sharp sell-offs pointed by the yellow arrows. The graph shows a very brutal bear market for oil.
The lockdown did not help, reducing the demand for oil so much the price went negative.
But was this the catalyst oil needed to breakout into a new bull market?
Since there was nowhere to store oil, producers started shutting down wells, shutting down well is very expensive, and re-starting them is also very expensive.
Data shows that the amount of oil coming out the ground now is slowing as wells are turned off, and some will not come back online again.
A wave of US shale oil producers filing for bankruptcy is rising as we speak, another supply shock.
Demand may not even need to hit pre-covid levels to enter a new bull market if producers have over-cut and there is not enough supply to meet new demand.
If inflation hits the streets, that is another bullish factor for oil.
Right now there are too many unanswered questions and the chart for oil does not look good at all, but we may be starting a new bull market if the above holds true and impacts the supply of oil.
The first level of resistance is $43, we are far away from that, it’s hard to work out support as prices have not been this low for over two decades, based on the last 3 monthly candles it’s around $17.
The RSI is not showing a lot of momentum, and things do not look good for oil in the coming months.
If you like this idea, please view my monthly ideas on Gold, Bitcoin, S&P500 and GDX. I provide a macro technical analysis combed with market fundamentals to see where price is heading next.