Nick Nasad
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WTI Crude - Huge Plunge in Oil Prices - A Relief to Global Consumer?

Oil prices (I'm looking at West Texas Crude here, not Brent) are starting to hit lows not seen since late June.

This suggests a couple of things.

  1. The geopolitical risk premium that was priced into markets as a result of Syria seems to have been priced out.
  2. The global economy, while still in a tepid recovery, is likely seeing easier oil demand easing, or keeping at stable levels that would find an equilibrium with supply below the $100 a barrel level.
  3. If prices remain at these lower levels (below $100) for the next few months it could be a positive for consumers (lower gas prices) and manufacterers (lower production/transportation costs). That could be a positive then for the US fundamentals when it comes to consumer spending.  
  4. In terms of the technical outlook, we look to be in a second mark-down phase, and therefore should start to come into some levels of demand/support levels. We have touched some old resistance levels from May and June. Therefore we may see some consolidation soon.
- Nick