There was a weekly-scale bottom extension in Brent crude oil last week. This comes after a $15 decline since the highs of a rally in late June and argues that the decline will end hereabouts. It comes at the same time as a sideways period of about ten weeks for WTI crude futures has brought the 'spread' between them down to only a few dollars. WTI has now compressed at a daily scale (although not yet at a weekly) and the price seems to be breaking up above those compression levels today. Charts:
The weekly bottom extension fits our view that commodities will probably rally as often stated recently and so this presents an opportunity to add oil to the portfolio of 'long commodities'. When buying a compression break it is usually prudent to wait until the end of the trading session, in case there is a late dip that might negate the break or maybe lead to a re-compression. Here however, we have two signals pointing in the same direction (upward) and so you may want to 'jump the gun' and buy now. If the market sustains the present rally through until the close that would be a good sign.