morbius glass

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morbius glass: Energy markets, Commodities and Geopolitical analysis.

Posted by Adrian on September 4, 2008

Energy Market Watch: Oil continues to fall.

Oil has begun it’s retreat on cue at about the same time hurricane Gustav was downgraded on the 1st of September 2008. It was a synchronized sell off falling below the 110 technical support (the current price now at 108-109). Of course on top of the hurricane downgrading and the little effect it had on the US oil fields in the Gulf of Mexico, is the current global slow down.

Still, as I mentioned in Oil lower, volatility market reaction. Oil now showing price instability. Could the mother of all oil shocks be brewing? the oil price is becoming unstable with new lows. Iran and Venezuela have requested that Opec cut output if oil falls to $100.00. The psychological support for oil is 100, any lower and we may see a crash in the oil price. Which could be somewhat unlikely, if Opec stand in, Iran tightens output (although another competing oil producer may increase output at the same time) and another hurricane threatens the Gulf of Mexico, or a conflict.

This could reiterate the concern of a large spike in the oil price. The stable range from a technical perspective is between 120 and 110.

At this point oil appears to be heading back above 110

(click on graph for larger image)

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