Oil bubbles up
Oil (#WTI) is making some interesting moves today as it comes off the pre-Christmas low of $42.63/bbl. There is interim resistance here just under $48.50, but a successful breach sets up the next resistance level approximately $10 higher. We feel that such a move is unlikely to be sustainable (without a significant change of scenario) and would therefore be looking to build a short position around that level. Saudi Arabia is still very much on the back foot with the political fallout from the casual butchery of a dissident in Turkey, and they will not want to upset their American allies by choosing such a time to scale back production. We do not see huge declines in the future for oil, but it’s worth bearing in mind that a $10 decline from $55-$60 to under $40 is a substantial percentage of profit to play for.