The fundamental and technical outlooks for oil suggest prices are close to the top of their trading ranges, according to Harry Colvin, Senior Economist at Longview Economics.
Colvin says the supply/demand outlook looks bearish for oil, based on 4 factors:
1. OPEC producers are likely to maintain high output levels
2. Supply profiles elsewhere are resilient
3. US production risks are to the upside
4. US and Chinese demand growth is likely to soften
On top of this fundamental picture, Colvin points out that their technical models are generating sell signals. He sees the recent strength in oil as nothing more than a relief rally and thinks oil is likely to fail at a key technical level (for Brent, the August 2015 intra-day lows), thereafter working its way lower in the coming weeks/months.
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