The story is still the same. Europe is weak, China is weak, and the U.S. economy is growing by a bit. It's a supply story, the only thing is that the markets are very oversold and oil is extremely cheap at these levels.

Avtar Sandu

Categorized in : Business

Most of this is already priced in when the Saudis said they were going to do it (resume production) fast.

We know that the process of rebalancing is taking place now, but there is still an overhang in oil and this will time, the market had moved up to $50 quite fast, so we might go down and see whether there is anything below $40.

The market is going to be soft until next week. The fear is that if the British actually decide to leave the EU there may be some sort of contagion, the rules for exit from the EU are not very clear. There are a lot of question marks over the economic consequences.

$30 may be intermediate support but I really honestly can't say whether this is the bottom, we see a bounce off here ... but a change in trend is not visible yet.

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The overall sentiment is still bearish but markets are oversold.

Normally it takes at least two quarters before things start to pick up but there's always hope for new stimulus in the market that will buoy the economy.