A sustained move under $53.61 will signal a good sellers revealing a bull trap. This will likely trigger a labored break with potential targets coming in at $52.40, $51.29 and $50.66. If $50.66 fails as support then look for the selling to extend in the main retracement zone at $50.28 to $48.83.
A sustained make room $54.00 will indicate the presence of buyers. This will also indicate that Friday’s move was fueled by fake buying rather and buy stops. The upside momentum won’t continue and testing $54.98 is a pipe dream for buyers from fuelled trade talks.
Lifting Iranian sanctions will have a significant effect on the entire world oil market. Iran’s oil reserves include the fourth largest on the globe with a production capacity of about 4 million barrels a day, driving them to the second largest producer in OPEC. Iran’s oil reserves are the cause of approximately 10% of the world’s total proven petroleum reserves, with the rate from the 2006 production the reserves in Iran could last 98 years. Most likely Iran will add about One million barrels of oil every day to the market and based on the world bank this will likely resulted in decline in the crude oil price by $10 per barrel next year.
In accordance with Data from OPEC, at the outset of 2013 the greatest oil deposits are in Venezuela being 20% of world oil reserves, Saudi Arabia 18%, Canada 13% and Iran 9%. As a result of characteristics in the reserves it’s not always possible to bring this oil for the surface given the limitation on extraction technologies along with the cost to extract.
As China’s increased requirement for natural gas instead of fossil fuel further reduces overall requirement for oil, the rise in supply from Iran and the continuation Saudi Arabia putting more oil onto the market should see the price drop in the next 1 year and some analysts are predicting prices will fall under the $30’s.
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