Oil prices gave back all of Monday’s gains as prices drifted lower in the technical trading range. The oil complex continues to sell-off each time there has been any rebound in prices that were driven by those that view the market as being in a rebalancing mode. The global overhang of oil is the primary driver as several of the major commodities in the oil complex have now tested and made new lows as shown in the following table.
The table compares the current price to where the price was at the November OPEC meeting as well as versus the low of the move since the downtrend began in June of 2014. As shown RBOB has made new continuation chart low today with the spot WTI contract just about $3/bbl above it’s low while the spot Brent contract is only $1.35/bbl above its trend low point.
With all of the fundamental signs still pointing to lower prices and with the downtrend still the dominant tend in the oil complex it continues to suggest that lower prices are likely in the short to medium term. Today OPEC’s board of governors was unable to agree on a long –term strategy plan and will not present anything to the oil ministers at the December meeting according to a report in Bloomberg.
It certainly suggests that OPEC is in a bit of disarray as more of the member states are likely starting to lose interest in continuing on the Saudi led market share strategy. By all measures in the short to medium term the strategy is not working for OPEC as their revenue stream is now down close to $700 billion dollars since the downtrend began in June of 2014. It will take years for OPEC to recover its lost revenue.