PRBS rescues WTI slumps, stay on for hedging further drops – “Japan and Iran” the draggers of further oil slumps

The non-stop streaks of WTI crude futures fall would have caused huge loses for commodity traders who had their open exposures to this price crash. But those who have deployed our strategy are rest assured with tight hedging. We recommend continuing with the same strategy based on both fundamental and technical reasoning.

Technical Glance: Well.., our both targets are achieved (47.44 & 42.22). Crude futures prices have touched five and half year's lows at 41.35 and there is no trace of recovery. At this psychological juncture we could foresee current bearish trend of the commodity remains intact as RSI signifies downward convergence with price drops even below 30 levels, while %K crossover below 20 which is oversold territory also suggests prevailing trend has healthy momentum.

The current crude prices are directly proportionate to the shrinking Japanese economy:

Japan's economy contracted on the back of falling exports and consumer spending, adding to fears that Asia's biggest economies are starting to slow at the same time, as a result oil prices fell in early Asian trading on Monday. US crude was trading at USD 42.07 per barrel at 8.12 p.m. EDT, 43 cents below their last settlement and nearing to six-year lows.

Japan's economy, the 2nd biggest in Asia and number three in the world, shrank at an annualized pace of 1.6 percent in April-June as exports slumped and consumers cut back on spending. The feeble economic numbers flash at a time when production around the world remains at or near record highs.

Impact of Iran nuke deal: OPEC is now projected to improve crude production to 33 million barrels a day, after international sanctions were lifted against Iran. Oman, the largest non-OPEC oil producer in the Middle East, has also increased its production. In last month, Oman pumped 1 million barrels per day, a 0.5% increase from June's daily output level.