Last year we seen oil prices get slammed in late June. Oil went below $80bbl and USO went
into the $29's. Uncle Ben has drooped the bomb and commoditizes were a bloodbath today.
With some more momo from the Asian Markets to the downside overnight we could see
the sell off continue tomorrow. June last year had a hard landing & we may be in store
for another one this year.
Im' not a chartist or into TA, however in 2013 WTI has been in a flag trading range with the lows getting higher. At some point the price has to break out of that flag pattern and the technicals point to the break being to the upside.
fwiw, as mentioned, I don't really subscribe to technical analysis - and don't really care if it breaks to the upside or downside, since I don't expect it to go up/down by that much.
Up much further and recession ensues, down much further and the new production dries up. So most likely we stay in the trading range with slight upward bias that it's been in for the last 3-4 years. Of course, that does not rule out temporary corrections of $10 or $15 which still keep it within that range.
P.S. I saw an article yesterday which stated drilling costs increasing by 9% per year. So the floor price is going to follow that upwards (since the marginal production will go away if the commodity price does not justify the drilling costs).
Not just in 2013, but there has been a summer swoon (May or June) every year since the recession.
In addition in 2011 we had the July/August debt ceiling debacle with the S&P downgrade.
Each time though the volatility died down and MLP#$%$ new all time highs within months.
Oil prices recovered quickly too each time.
China manufacturing index last night was reported at 48.3 the lowest in 9 months, China`s banks are starting to have the same issues we did in 2008, China never went through the recession as they used stimulus at a higher rate then we did building an extra 60 million brand new empty houses. Fed tapering means no more free money to jack up commodities but I do expect the ups and downs on the way down. August will determine a lot when the new leader of Iran takes office, if the nuclear issue is settled we see oil stay low as Iran gets to pump and sell there oil.