By the end of next year, the United States is set to become the world’s biggest oil producer. Once you grasp this, you understand that it has an incentive to promote higher oil prices, both to further its own oil industry and to generate big fat profits for the oil majors and bulging bonuses for oil company executives. The potential downside of driving the oil price higher, from the standpoint of those in control, is that designated enemies such as Iran and Russia might also benefit from these higher prices. So the way to prevent that from happening is to subject them to sanctions and oil export restrictions, and fabricate justifications for doing so, so as the ludicrous accusations about Russia meddling in the election. An added benefit of the sanctions and oil export restrictions on out of favor states is that it restricts supply, driving the price up more, and of course a more extreme way of driving the price up perhaps to giddy heights would be to bomb Iran, which would certainly make Israel very happy. The ordinary US motorist facing stiff price hikes at the pumps can go fly a kite.

The predictions made in the last Oil Market update posted on the site nearly 3 months ago, on 12th May (too long ago) turned out to be correct. We were looking for a near-term reaction and then an advance to new highs, and that is what happened, although it then proceeded to react back again during the first half of July and we will now proceed to consider the outlook.

On the latest 1-year chart for Light Crude we can see that the reaction back during the 1st half of July was nothing out of the ordinary, and it has brought the oil price back down to support near to the lower boundary of the intermediate uptrend shown, which is expected to turn the price back up again, especially as moving averages are still in quite strongly bullish alignment and the earlier overbought condition has fully unwound, as shown by the MACD indicator. However, on this chart we can also see a restrictive Dome pattern forming whose origins can be traced back to late last September, which may prevent the next rally getting as high as the upper return line of the uptrend channel before it turns down again, and we can get a better perspective on this Dome pattern by looking at the 3-year chart, which puts it in the context of the entire bull market advance to date from the early 2016 low, following the severe “crush Russia” bear market that preceded it and resulted in a lot of oil workers in the States being forced into idleness.