Shares digital

Crude Oil W. Texas Sweet Spot Cushing $87.80

The outlook for the black stuff is uncertain. US economic growth is slowing, with the ISM non-manufacturing index showing a contraction in activity and US inventory data showing larger crude stocks. This news saw the price retreat last week – closer to the $85 level, important according to David Jones, chief market strategist at CMC Markets. He says: ‘The March contract is getting near the lows for the year to date, but we have seen some buying coming in. A lot of people may consider oil a good risk/reward play as, if $85 acts as support, we could possibly see a rally back up to $100, following the one-year trendline started in January.’ However, he adds, if the price breaks through that barrier the trendline effect would be over and the price could fall as a response. News of Royal Dutch Shell (RDSB) interrupting production in Africa due to a pipeline leak is good for the bulls, but the general mood that a slowing US economy will put pressure on demand seems stronger in the short term.

ACTION: SELL Crude Oil WTS • Target $84 • Stop loss $90

TIME TARGET: 3 WEEKS