NYMEX

On November 30th 2016, Bloomberg trumpeted the following headline, OPEC Confounds Skeptics, Agrees to First Oil Cuts in 8 Years. On the day before, (i.e. November 29th) oil prices had plunged 2.5% and the NYMEX Oil ETF was trading at $11.34 and the news drove the price up to $13.05 by January 6th, 2017 where it peaked and it’s been downhill ever since.

Was this a case of “Buy the Rumor Sell the News”?  Not quite since it did climb for a couple of months before reality set in, but the OPEC deal was doomed to fail pretty much from the beginning. First of all, U.S. Shale Oil wasn’t part of the deal and secondly the targets were set at previous peak production so there really weren’t any “cuts” simply limits to future growth. After falling to $9.89 on June 21st the price has rebounded a bit moving back above support so we could easily see a move to the resistance line or above. So have we seen the bottom and is this the beginning of  a new rally?    Or is this a counter-trend rally to the top of the channel or simply a fake and the beginning of a correction to the downside? In today’s post, Brian Noble looks at the question, “Is a big move in Oil Prices Due?”~ Tim McMahon, editor.