In the oil market, the recent events have shown one thing to Saudis that they have to bow to the US. Trump was serious when he said that the kingdom may not survive if the U.S. doesn’t provide its security. How big the bill will be for this service? This will be something which will always remain a secret, but one thing is for sure, if MBS wants to come out the current mess, he would have to foot the bill. But one thing which will not remain secret and Trump will publicly be able to take credit will be the increase in the oil supply by Saudis- just what he wanted. For the time being, the oil prices are supported by the fact that the supply is no longer the issue. This is because the demand equation is much more stronger now. The EIA data released last night showed that the crude stockpiles have dropped unexpectedly, this has provided more support for the price.
The below chat shows that the price of Brent is trading within the Bollinger band on a 4-hour time frame.This shows that the volatility is at its normal level and it is likely that we may break out of this band soon. The price is trading below the 50 and 100- day moving averages (50-day in yellow and 100-day in green). Given that the 50-day moving average has dropped below the 100-day moving average, this triggers a negative signal for the price and it is highly likely that we may see the price moving lower unless the 50-day moves above the 100-day moving average.
