Morning Report Friday 28 November 2014
Oil plunges to a 4-year low overnight, I revisit the sector
With most markets in the US closed overnight for Thanksgiving, any news was certainly going to produce an exaggerated move and that is exactly what we witnessed with Oil. Crude Oil fell a dramatic 6.3%, breaking the $US70/barrel for the first time in 4 years after OPEC announced it would take no action to ease a global oil-supply glut, resisting calls from Venezuela that the group needed to reduce production to slow the collapse in prices. Oil stocks around the world fell around 4%, on top of recent steep declines, a move that I envisage will be mirrored locally.
BHP Billiton (BHP) $32 – Technically remains weak longer term, targeting $25 area minimum – around 22% lower. However, short term I still see a bounce back up towards the $34 area i.e. 6% higher, perhaps Iron Ore will help a bounce.
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