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Pay attention and open your eyes

Posted: 02/09/2013 - 1:24 pm

It has been a while since our last update on Oil and much has happened from the time we published our piece back on December 30, 2012 (read: The fall and the rebound).

At that time, we were cautious on Oil (Brent) and we said that our view would turn bullish following a break above the year-long down trendline – the one from March 2012 to January 2013.

Needless to say, that line was cleared twenty days ago and the price of oil has been rising ever since.

While we have not published a note on Oil since it broke above that key trendline, our bullish stance has clearly been voiced early on during our TV interviews. In fact, on January 21 (one day before the move began), we explicitly said that that a move above 115 in Brent would likely push the price to 130 by June of this year (watch minutes 15 to 20 of our Arabic interview On CNBC Arabiya).

With Oil’s decisive breaking above 115 in the last few sessions, our bullish argument is very much in play.

As evidenced by the chart, Brent prices cleared a very important barrier marked by the triple-top formation that took place between August and October 2012.

This is a very positive indication in our view and sets the stage for further gains. As shown on the chart, a move to the 125-130 area is very probable implying an upside potential of 5% to 9%.

With oil prices looking strong, traders should open their eyes for the potential opportunities that could unfold in the Saudi petrochemical sector which, at the moment, remains completely detached from the rise in oil prices – a widening divergence could prove an opportunity to buy.

Stay on the lookout for our stock updates for potential buying opportunities.

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