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Why Crude is headed higher next week and next?!

The failures are a very important indicator for the health of the system. When a particular element is put to test and it does not perform its usual process as expected, something is wrong. Something is spooky!
This is very true in the markets and technical analysis too. Whenever a particular chart formation occurs, and the pattern gives its thrust projection but prices fail to reach the projections, something is wrong. It is either the calculation gone awry or underlying current has changed. This is similar with the news. Whenever a news comes out which is expected to have a negative or positive impact but prices do not respond. Something is wrong.
This goes too with the over-reaction to a particular news. For example, if a non-important news/event is branded as the main cause of movement in prices, you know something is wrong.
We saw that happening in a good measure with the crude this week. Crude went up in the aftermath of Russia cutting its gas-supply to western states. The fear of Energy security resurfaced and made the European states how close to the brink they lived! Yet, when the Russia allowed the gas back in, the crude remained stable. [Yes, the price of gas was negotiated higher, therefore the prices had less reason to fall - for the of substitution]
Another event that occurred a while back is the OPEC repeatedly came out saying the ideal price band for the oil is at $45-55. Oh! so generous!! But if we look back a few years they were happy with $25-28. So, mean! Crude is therefore pretty much bottomed out at $45. And more petro-profits! This halted the price decline. Good with that. But when OPEC talks to Russia [a cartel brewing??] and also talks about cutting down the production by 1million barrels a day, all the hell looses and the bottom is set in place. This event followed by the Russian Gas episode drove the prices to $63+.
The conculsions are simple, the positive news for the crude are having more impact on the markets than the negative news/events. If at all, the negative events are the periods of rest.
Market is simply telling us the Crude is headed higher. That is our opinion.
Happy Weekend
:) Falkor

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