Oil Slick
7/28/2015
Crude has been under huge pressure this month, down more than 21% in part to a combination of factors, including Iranian oil coming back on line, China’s economy slowdown, and global demand slowdown. The calls are back for oil with a “3” handle, meaning to change hands in the thirty-dollar area, although the risk-reward dynamics change quickly at much lower levels. In other words, producers will stop pumping the stuff out of the ground. I am not sure where producers slow down, but the other side of the coin is demand. The fact is that demand should improve in the second half of the year; there could be another spike higher. On that note, crude is in a reverse head-and-shoulders formation, which is typically a buy signal. Note: I will update our Oil Report at the end of the week. In the meantime, while many oil stocks are severely oversold, crude must establish a firm bottom before equity buyers step in. Click here to leave a comment: http://www.wstreet.com/member/commentary.asp?con_id=35673#addcomment
Charles Payne
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