The $150 oil spike theorists are back in force. Anytime geopolitical risk in the Middle East rears its ugly head (which, unfortunately, is far too frequently), there are those who say that any severe supply disruption will cause a severe spike in oil prices. It really hasn’t happened since the late ’70s (the spike 5 years ago was more due to investment and growth demand than supply), so I’m surprised each time the possibility is trotted out.
In any case, the overnight price action in crude oil was noteworthy. The WTI front-month crude oil contract made a 2 year high, and was quite close to its 5 year high set in 2011:
Today’s candle actually looks ominous for the future path of oil from here. The contract briefly broke out over the 2012 high around $110, but is now trading beneath that level, and 110-114 is serious long-term resistance going forward.
My inclination is to sell oil here, though I’m going to hold off as I’d rather wait for the upward momentum to slow a bit, and the 50 day ma to potentially flatten out in the coming weeks. But I have my eye on oil failing up here near important technical resistance, regardless of what the headlines might say.