Oil on a 25mth cyclical bull run? Update 4 - oil sits in static range.

Risk aversion is subtly moving into global markets. This can be seen with the static gold and oil prices, even with stock market rallies both oil and gold have maintained within their trading ranges. As discussed in Gold price breakout on 'mini' crisis, gold could breakout into the higher ranges depending on an 'event'. In the meantime the erosion of US dollar purchasing power is underpinning commodities which of course are good hedge on inflation/or global recovery.

From the two commodities gold may hold it's ground better than the oil price. If we see US dollar strength on a short term while markets enter a correction phase, the commodity correction could also include the oil price - if China's economy falters in the near term. So at this point the interesting aspect on a looming market correction is the indication that it is starting in Asia, notably China and Japan (indexes).

So if a commodity and stock correction does hit oil there are two supports that should be noted: 65 and 58 (on a 42 month graph). Please refer to graph:



Of course depending on a possible inter-continental conflict other markets will correct with gold and oil moving further up - substantially. This should be factored in (war) when looking at possible market conditions into 2010.