Brent Crude is set to rally in the wake of potential US vs. ISIS action
Our final tip for this week is to buy daily calls for Monday's expiry on the UK traded Brent Crude Oil commodity contract. We are very well satisfied with the market price action today and feel at this point in time it would be very prudent to start buying daily call options on the Brent Crude Oil contract at current levels around $97.60.
There are increasing geopolitical tensions ongoing in the middle east and Mr. Obama's yesterday press conference pointed that the US might take military action against the Islamic Republic. This is the main factor behind the move in the oil price these days.
Contributing to this factors is the increased likelihood of another spat of sanctions between the Western countries and Russia. We could see way higher levels in the near future if the serious challenges for oil supply increase.
Our technical analysis of the price of Brent Crude Oil is revealing that there is some strong support around $96.70 - $97.00. Ideally we would be looking for a test of those here, but unfortunately this is not the best course of action right now as there is no guarantee of future drops to those levels.
Current prices are around $97.61 and we are confident enough to buy daily calls for Monday's expiry targeting an extension of the move towards $98.00 initially. Following that, we expect once the trend line on our chart is broken to see $99.00 and maybe even back to $100 per barrel.
Alternatively if we see a break below $96.70-97.00 we could target a move towards $96.00 and below. However for now we are not envisaging such a scenario.