In today’s headlines,
“Oil futures soared on Monday for a third consecutive day, rising more than 8 percent, as a downward revision of U.S. crude production data and OPEC’s readiness to talk with other producers helped extend the biggest three-day price surge in 25 years.”
This could be a sign that will turn the oil industry around. In relation to my earlier post on BP – “BP Reports $6.3 Billion loss – What to expect?”
Recap, this was the chart earlier on 28 Jul 15.
The stock price went back to test it’s downwards trendline at $38 and continued it’s downtrend. The retest at $38 will be a safe entry on the short side with lower risk reward ratio.
What’s happening now…
The fall continued with a gap down in the last week. Notice that volume increased significantly, indicating that not only are there a lot of sellers, there are also a lot of buyers on the other end.
Coupled with the news of an OPEC discussion, the markets will be looking at a reduction of oil production, and subsequently a recovery of oil price which in turn will also drive other oil related industries back up.
There will still be uncertainties if the discussion will turn out positive and if the Global markets will continue to fall. However, given such uncertainties, it would wiser to exit any short positions especially in the oil industry.