Yesterday, futures contracts for crude oil set a new minimum value, and WTI crude oil for the first time since 2004, was trading below $ 30.
Market sentiment is extremely negative for oil, and forecasts of large banks is extremely pessimistic.
To continue falling oil there are objective reasons in the form of calendar factors, excess production deficit storage tanks, the upcoming release to the market of Iran, OPEC's inability to agree on production cuts and other reasons.
But I standby idayu that oil can turn very suddenly, though it could happen any day.
It should be noted that the reversal in oil prices in the past year took place January 13!
My confidence in the fact that oil will unfold in the next few days, based on the following reasons.
1-Oil falls seven consecutive days and greatly oversold. The daily candle has turned out to be completely at the lower Bollinger Band.
2 Although oil is near the round value of $ 30, punching him there is no reason for him there is no significant amount of stops. At such low levels of the foot can be only sellers.
3 It is clear that in the summer due to the seasonality of the oil will be more expensive by 10-15 dollars and this can be seen by a larger than usual contango in oil futures.
4 Oil is trading at levels at which its production is unprofitable for many producers.
5 In the past two days, investors are actively buying USO
USO is the ETF-fund that invests directly in the oil and are comfortable with this tool, unlike futures it has no expiration.
Yesterday were the maximum volumes of trading in this instrument in history.
6 Bankruptcies in the oil industry has already started and for their continuation is not necessary to keep the price of 30. To complete the redistribution of property is enough for 35-40 dollars.
A couple of days ago, filed for bankruptcy the US subsidiary of Glencore, one of the world's largest companies in the market of raw materials.
In general, I do not think that the excess oil is to blame for the fact that oil prices dropped to $ 30. Oil brazenly and cynically are for the purpose of legal seizure of property and wealth.
7- psychological reasons: profit accumulated a lot of sellers, and the probability of a sharp reversal from the powerful shortokrylom soared. Only very large and confident players can continue to play on the slide.
8 appeared in recent days on forecasts that oil prices will continue to fall and fall almost to 10-15 dollars is very reminiscent of last year, when such apocalyptic predictions preceded the reversal of oil in January.
But the main reason why oil can deploy at any time, I believe the price ratio between the assets, which should cause investors to pay attention to oil.
Shows a graph of the ratio of the price of gold / oil.
This is a monthly chart and it shows from 1990 to the present.
In the 90s, the maximum value of the ratio of the gold / oil twice was about 30 in 2008, about 25, last year it was about 27, and yesterday it was 35.7.
This ratio illustrates well how today cheap oil, and by the way, explains why investors in the last two days so actively buying oil as a USO.
If you think that now you can invest in gold, then it follows automatically that you can buy oil.
For me, not really about chevidno, can now invest in gold. Deflationary trends that we are seeing now in the economies of the western countries, and the rising dollar did not contribute to the growth of gold prices. But it is very possible that in the second half of the year will unfold when the dollar down, gold will start a strong rally.
By itself, the sale of gold against the oil on the horizon of 4-5 months is a bargain with a guaranteed profit. I see the goal of the deal, at least in the region of 27.
Oil is now very cheap, and from day to day, investors are aware of this, and the price of oil goes up, no matter what the circumstances, whether the supply / demand, the dollar and other factors.
Moreover, in my view, the current price of oil simply inadequate as a result of inflation, the dollar is now quite different, not the same as it was in the 90s.