Crude Oil has yet again made a new 2013 high, above $99.00 from June 19th, as turmoil in the Middle East has surfaced once more. However, it is not conflicts in Syria but rather the millions of protestors in Egypt who want President Mohammed Morsi to resign immediately. Besides elevating the amount uncertainty in global markets, this has caused oil to rally because of heightened fears around a potential closure of the Suez Canal and thus leading to major supply disruptions. It is estimated that 2.5 million barrels of crude oil pass through Egypt each day – Combined between shipping through the Suez Canal and the Suez-Mediterranean (Sumed) pipeline.
Technically, US Oil's move above the key $96.65/85 level set the stage for a further advance. continuation higher. The ensuing break to a fresh 2013 high, followed by the psychological & barrier/option related $100 level and then the critical $100.35/75 level of resistance (convergence of the April 2012 low & Sept. 2012 high) suggests there is room for a continuation higher. Furthermore, the daily RSI break above the noted 60/65 level validates the bullish momentum witnessed in price. Accordingly, we would not be surprised to see a test of the $103.55/65 area over the coming sessions – Convergence of long-term triangle resistance (drawn from the 2011 high) & the 78.6% retracement (of the 2012 decline). Depending upon whether this level remains intact or breaks, it would determine if the longer-term Elliot wave count (wave-D) is favored with a pullback towards wave-E or if the previous triangle and inverted H&S breakouts should be preferred and thus enacting their respective measured move objectives.
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