10th November 2011

UPDATE

Oils strength

Technical Fundamental

in association with

Disclaimer

Authorised and regulated by the FSA

Oils strength
us@cl.1 High 92.58 114.83 High 125 120

WEEKLY CHART
115

in association with
High 87.15
61.8%

The oil market may be breaking out of a confusing range. The important breakdown through the support band from Prior Highs at 87.15- 92.58 was impressive and rocked the bulls. But the double bounce off the 75.71 level (not quite a 50% retracement of the bull run from early 2009) has achieved a Double Bottom AND broken the steep down trend resistance. The monthly chart (not shown) will register a bull key reversal.

110

105

100

50.0%

95

90

UPDATE Technical Fundamental

89.69

85

80

Low 75.71

75

70

65

Sep

Oct

Nov

Dec

2010

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2011

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

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Nov

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2012

Crude Oil Light Sweet Dec 11

106 105 104 103 102 101 100 99 98

Now look closer.

DAILY CHART
The detail shows the impressive break back through overhead resistance (91.77-95.50) . And the support from Prior Highs (89.69, 94.65) that characterizes well constructed bull trends has been good. Note that the High volume break through 94.65 was a break through a 50% retracement resistance level

95.50 (Prior Low resistance) 50.0% 91.77 Low (Prior Low Monthly $41.15 Pri or Hi gh support from the resistance) conti nuaition chart

94.65 High

97 96 95 94 93 92 91

89.69 High

90 89 88 87

$39.99

86 85 84 83 82

$33.70

81 80 79

Low 77.12

78 77 76 75 74 73 350000 300000 250000 200000 150000 100000 50000 0

Disclaimer

13

20

27

5 July

11

18

25

1 8 August

15

22

29

5 September

12

19

26

3 10 October

17

24

1 8 November

14

21

Crude Oil Light Sweet Dec 11

High 94.65

in association with
90.06 High 89.69 High

UPDATE Technical Fundamental

100.0 99.5 99.0 98.5 98.0 97.5 97.0 96.5 96.0 95.5 95.0 94.5 94.0 93.5 93.0 92.5 92.0 91.5 91.0 90.5 90.0 89.5 89.0 88.5 88.0 87.5 87.0 86.5 86.0 85.5 85.0 84.5 84.0 83.5 83.0 82.5 82.0 81.5 81.0 80.5 80.0 79.5 79.0 78.5 78.0 77.5 77.0 76.5 76.0 75.5 75.0 74.5 74.0 73.5 350000 300000 250000 200000 150000 100000 50000 0

DAILY CHART
This may clarify matters. The Double Bottom completion level - which is powerful support lies beneath the market at 90.06. In addition we can see that there is short-term support from the near Prior Highs at 94.65 and 89.69. Minimum move implied by the Bottom - about 106.

Low 77.12 77.38 Low

8 August

15

22

29

5 September

12

19

26

3 October

10

17

24

1 November

14

21

Disclaimer

Oils strength

FUNDAMENTALS:
in association with

Until recently our main concern about the oil market was the turmoil associated with the Euro zone sovereign debt crisis would slow economic growth, squash energy demand and send oil prices much lower. However given the nature of oil, its importance to the global economy and the geopolitics of the major oil exporting region, we were always aware that the oil price could find support from on going regional animosities in the Middle East. Apart from the Israel/Palestinian conflict, Iran has been a long term source of anxiety and after a period where concerns about her nuclear ambitions had fallen off the radar, suddenly over the last couple of weeks Iran is right back centre stage as a major geopolitical concern, not just affecting the price of oil and regional stability, but as a serious threat to world peace. Iran has been working on the development of a nuclear industry which she claims is for peaceful purposes for some time and although many in the west including Israel have long suspected a clandestine weapons program has been running in parallel, Iran has vigorously denied this and no evidence had been found. All this appeared to change over the last few weeks. There were fresh rumours that Israel was considering a unilateral military strike on Iran to eliminate that countrys nuclear weapons program; Israel had even tested an ISBM more than capable of hitting Iran. Additionally the IAEA was becoming concerned that Iran had been hiding a weapons program and this week released a report through the UN to that effect.

UPDATE Technical Fundamental

Oils strength

FUNDAMENTALS: CONTINUED
in association with

So what does this mean for Oil. Clearly if Israel launched an attack, whether successful or not, Iran would use all means to retaliate. That would likely be an air strike on Israeli cities and the activation of terrorist cells globally to cause as much damage and mayhem as possible, but the main weapon is of course oil.

UPDATE Technical Fundamental

This could be deployed in several ways: 1. Iran would likely stop selling Oil to the western powers, 2. Iran could put pressure on other OPEC member states to disrupt their oil exports, 3. Iran would likely sabotage oil pipelines, and 4. Iran could block the straits of Hormuz and Persian gulf, which is probably the most important oil export rout in the world. Obviously any combination of these and the associated rise in tension would send oil prices sky high. Is any of this likely to happen? With Iran much closer to building a nuclear weapon than any intelligence organization had previously thought, the window to act is closing. Moreover sanctions havent worked. If Israel feels she can knock out Irans facilities and handle the almost certain retaliation, then there is a high probability that she could act; she has before, most recently atacking a suspected nuclear site in Syria. So while we still see the Euro zone sovereign debt crisis having a major negative affect on the global economy, it is no longer economics driving oil, but geopolitical tension; dont be short!

in association with

UPDATE Technical Fundamental

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