Oil extended recent gains after OPEC rebuffed Donald Trump´s advice to boost production. Brent broke above key levels yesterday and is trading at levels last seen back in 2014. Several pundits have started speaking about oil prices reaching 100 USD per barrel.

Recent bull run in oil has also been propelled by a decline in US stockpiles.

The escalation of the US – China trade war is an obvious negative for oil, but this was overshadowed by bullish comments from OPEC. The organization sent a rather clear signal to Trump who has been criticizing OPEC for wanting to push oil prices higher.

The US sanctions imposed on Iran will go into full effect in November. Lets see if people have calculated Iran´s supply well or if a shortage of supply from Iran could push oil towards $100?

The longer term chart of Brent looks interesting for a possible bigger break out higher. Ideally, the chart would need to catch some breath before continuing the move higher (it wasn’t long ago we traded at 70). Note how Brent has reversed down from the 80ish level on several occasions this year. A proper close above the big resistance and shorts will feel the pain.

The shorter term chart shows the recent break out more clear. Oil has traded in the 70/80 range since April. A close here or higher and don´t be surprised to see Brent trade up to 90.

On the other hand the non commercial net contracts have been on a steady rise lately as traders have been running to cover shorts. Watch this carefully as such a big short covering has definitely given oil support irrespective of rhetorics from OPEC or Trump.

The energy ETF, XLE US, has been on fire lately as well. Chasing it here is probably a little late, but do note the channel break out. Big resistance is around the 78/79 level.

Source: charts by Bloomberg