Following the weekend’s developments, namely, the bombing of Saudi oil facilities, with responsibility claimed by Houthi rebels and finger pointing at Iran; the now front month November contract gapped $9.10 from Friday the 13th’s close to the high Sunday night – Monday morning. While the market has somewhat settled down, it remains without the gap closed and above the broken upper trendline from the October 2018 and 2019 highs (pictured below).
While the U.S. now trumps Saudi Arabia in production, there are reports of 70+ million barrels of Saudi storage, the global oil market is more diversified than in the past. There are reports of capacity coming back online, but there remains the concern for escalation should there be military conflict in the region.
While these fundamental developments are being monitored, several technical questions also remain. For instance, the gap remains unclosed, former trendline resistance is acting as support and the Fibonacci levels from the Friday close to Monday morning-overnight high remain.
Movements such as this often have the potential to create opportunity in the market. To discuss your trading in this market and others, please contact me at your convenience.
