| Commodities
Oil Heads Lower Well, short term that is. Indeed, as we said last week, the price of front month Brent crude continues to ease slightly, hitting a low of US$56.51/b, before moving back above US$57.00/b. The small decline in prices occurred as result of a large build up in US distillate inventories. Although bullish medium term, a further easing in prices is possible. Key support levels to watch on the downside are US$55.00/b and US$52.00/b. Any drop through the latter level, due to a change in current supply and demand factors, or an easing of geopolitical tensions, would see a slide to major long-term trendline support at US$44.00/b, which still represents a high price of oil. However, given the ongoing violence in Iraq - which has killed 100 people in the last week in 16 suicide bombings - and the growing tensions between Iran and the US, the price of oil is likely to stay well supported. On a fundamental basis, ongoing strong demand from China and the US will remain strong. As such, further price spikes cannot be ruled out on any supply side disruptions.
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