Crude and Brent oil has been under tremendous pressure for the past few days, but have bounced back up after traders stepped in to lock some profit. Although, the overall picture remains very grim as the uncertainty over Greece is impacting the appetite for investors. But, mainly it is the sell off in the Chinese equity market, which is flashing big red lines for investors who are worried that this could be the start of something big, especially, after all efforts from PBOC are not working to hault this sell off. Provided that we already have enough supply of oil, and the demand and supply equation remain out of whack, it is difficult to see much room towards the upside. As for the non OPEC production, the major head wind will be the capex drop and this will keep the lid on the supply output. So, in a longer term this will help demand to balance.
Iranian nuclear deal with global powers is also impacting the price of oil and any further positive development will make the bullish sentiment more sanguine. While, it is important to emphasize, that it will take some time for Iranian oil to hit the market, but certainly traders are willing to price that factor as the story develops further.
Finally, the production of out of OPEC remains very elevated and this is constantly denting the price.
The price is trading below its downward trend line and this confirms that the bias remains towards the downside. Bears have full control of the price as the price is trading below the 50 day (shown in yellow) and the 100 day (shown in red) moving averages and as along as we stay below these averages, the strong bias will be towards the downside. However, extreme, caution should be taken, because the momentum indicator, the RSI is trading well below the oversold region and this could trigger some further profit taking or fresh capital employed to move the price towards the upside.