Joshua Mahony, market analyst for IG index, joined Zak Mir and Bill Hubard to discuss the future for the price of oil, as well as a brief view on inflation.
Is a reversal in the oil price likely?
Mahony began and outlined that we are about to see a surge to the upside in terms of oil price, not for months and months though, just a short period. He continued onto the US driving season, which has seen a massive period of downturn and a weaker relationship between the price and demand for oil. Instead the focus is on supply, highlighted Mahony, with many countries responding with increasing supply, with Hubard noting the oversupply in Saudi Arabia and the Iran deal. He believed that he doesn’t see oil coming out of Iran just yet, but there is certainly with something on the horizon, leading to depressed oil prices for some time in the future.
Oil and energy prices can’t be stripped out of every industry
Mahony highlighted that the inflation picture isn’t going to pick up anytime soon, with oil and energy prices massively influencing the costs for many other companies.
Technicals back to 1st quarter 2014
Mahony noted the massive sell off and resurgence, with the trend line from two lows reversing higher. He continued onto the bearish triangle formation, which he contrarily expects to break to the upside.
FOMC changing the plan for oil prices
Mahony and Mir finished on fundamentals, with Mir commenting first on OPEC, and that they will go bust if they continue dumping oil on the market. Mahony outlined the FOMC, whose rate hike decision may still have a part to play with the oil price.