In a year which has become famous for delivering surprise, shock and sadness, very often at the same time in all walks of life, the way that OPEC actually delivered an agreement on oil production was probably par for the course.
The fact that it had not done for years, and was in danger of being labelled “the world’s most ineffectual cartel” meant that as well as being the most famous.
However, there were signs that the first supply cut since 2008 could be forthcoming. It was interesting that leading up to the deal in which output will be reduced by 1.2 million barrels a day, the market seemed to be highly responsive to the Russia influence.
Indeed, it can safely be said that if it had not been for the strange bedfellows of Saudi Arabia and Russia, the last minute accord allegedly at 2 a.m. may never have materialised.
Can the rally in crude oil last?
The issue now is whether the rally in crude oil can last? At a time when concerns over growth and the run up to a Trump Presidency mean that demand for the commodity is particularly difficult to fathom.
But at least from a technical perspective we have this market heading higher within a rising trend channel on its daily chart in place since this time last year.
The floor of the channel runs at $45, with the resistance line projection over the next 2-3 months heading as high as $60, a level which probably now tallies with most observers expectations of where this market can stretch to in coming months. Not surprisingly, energy stocks have led this week’s risers.
While much of the focus has been on the shenanigans at OPEC, we are nevertheless spoiled for choice in terms of other news flow and perhaps more importantly event risk.
While December 2nd was offering the most important traditional economic number in the form of the Non Farm Payrolls for November in the US, expected to come in at 180,000, the prospect of a new rise in interest rates in the wake of this has already been factored in.
Indeed, I may be one of the few who doubt that Janet Yellen at the Federal Reserve will not press the button on the basis of “political uncertainties.”
In fact, given the way that the Gold price has been plummeting off the back of the strong Dollar, it could be the case that such a surprise is the only thing to get the yellow metal and mining stocks back on the front foot.
That said, it would appear that mining giant Glencore (GLEN) does not really care if precious metals rebound or not. It was able to gloat that the debt mountain it has been grappling with, and nearly brought the company down, had been reduced.
So much so that it is to reinstate the dividend. Given the way that the shares have been flourishing even without a yield, one would imagine they will be well underpinned over the course of 2017.
But if there is one thing on the horizon which has traders and investors on edge it is the Italian Constitutional Referendum, which has effectively become a “back me or sack me” affair for Prime Minister Matteo Renzi.
He has backed himself into the corner that our very own David Cameron. While the issue may not literally the cliff hanger as in “The Italian Job”, the questions to ask now are whether if Renzi gets the thumbs down there will be a breakup of the Euro, then the Eurozone?
This is especially the case if the European Central Bank (ECB) is unable to bail out the situation in this instance, as it did with Greece? For those who like living dangerously, betting on the ECB having deep enough pockets to “do whatever it takes” yet again may be the prelude to a “Santa Rally”.
Zak Mir is is the author of chart topping books, including 101 Charts For Trading Success and 49 Golden Rules of Technical Analysis, and is generally acknowledged as being one of the most experienced independent technical analysts in the UK.
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