Crude Oil About To Make A Breakout

Crude oil has moving in the tight range of $10 for the last 2 months. “We’ve really been trading in this range from $51.50 to $57.50 and being that we’ve been in this for a bit now, I would expect for us to actually break through to the upside,” said Wolfberg, head of U.S. cash equity trading at BNP Paribas. “I watched the commodity jump off the $45 level and it has been at this midpoint where we’ve been consolidating for two months,” he added. “Resistance is coming in at $61.40, and I am watching that level closely.”

So everything hinges on the outcome of Iranian Nuclear Negotiations. If the negotiations fails that means no additional barrels of oil in the global market. Again Capital analyst John Kilduff said if talks actually fell apart altogether, the price of oil could immediately jump $10 a barrel.

“The knee jerk is going to be higher (prices). Also, I would assume relations will deteriorate between the U.S. and Iran, and maybe others, and that will raise the security premium for potential military action that Israel will push for,” he said.

Now higher oil prices might bring in some relief for the shale oil producers of North Dakota. The ongoing pressure since oil prices dropped sharply last fall is squeezing drilling operations in North Dakota and the Bakken Formation. The number of active rigs in North Dakota was 77 as of June 12, down from 145 rigs the same day last year. American Eagle Energy, a Colorado firm drilling in the Bakken Formation, filed in May for Chapter 11 bankruptcy protection in Denver.

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