Oil climbs more than $4 on a terrible tape

[forex4you]

Oil climbs more than $4 on a terrible tape

<p>The trade in the first half of the year was to sell stocks and buy oil. </p><p>That's shaping up to be the trade of Q4 as well. WTI crude oil are up 5% today and briefly touched $93.00, which is the highest since August 30. It's also come on a day with a strong US dollar and a brutal decline in equities.</p><p>Energy could be a big problem for the global economy next year. There are people talking about the potential for a second wave of inflation on renewed strength in oil and gas.</p><p>I don't think that that's a big risk. Oil and gas alone in a soft economy aren't going to stoke inflation. Even if commodity strength extends to metals and softs it won't offset weakness in things like housing and manufactured goods.</p><p>In any case, what's the trade for oil next?</p><p>It's turned around on a fundamental surprise -- OPEC+ cutting 2 million barrels per day from quotas and around 1mbpd in real production. Moreover, that move sets a floor under oil prices and sends a signal that they mean business.</p><p>Up until last week, the trade was demand destruction but risks are growing of supply destruction from  and demand growth from China reopening. In addition, the SPR releases are coming to an end.</p><p>Technically, have a look at the weekly chart:</p><p>That's a powerful three-candle reversal. What's needed next is a decisive move about the series of lows in the $93-95 region.</p>

                This article was written by Adam Button at forexlive.com.

Source: Oil climbs more than $4 on a terrible tape

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