Brent Oil Weekly Chart; Sideways Symmetrical Triangle; Saudi Arabia Oil Refinery and Field Attacked

International news reports say drones attacked Saudi Arabia's largest oil facility as well as its major oil field. The smoke is visible by satellite. 

The Tadawul All Sahre Index (Saudi stock market) slipped a couple percent at the open but then recovered to down about -0.5% as well as neighboring countries. The day looks to finish down -1.1% a modest drop. Analysts are calling for a $2 to $10 jump in oil prices depending on the extent of the damage. About 5% or the world's production will be off line. The price shock should only be a short-term thing since the world remains awash in oil. The Saudi's, OPEC nations and Russia have all been holding back on production to maintain buoyancy in the oil price. These nations depend on oil revenue to provide the cash flow to run their countries and meet their obligations to the huddled masses.

Days ago, traders rejoiced at the dismissal, or resignation, of National Security Advisor John Bolton who is a hawk on Middle East policy. US Secretary of State Pompeo and Treasury Secretary Mnuchin laughed and danced with glee at Bolton's departure. Pompeo says Iran is behind the attacks. Houthi rebels in Yemen claim responsibility. Iran backs the Houthi. Saudi Arabia and Iran are fighting a proxy war in Yemen.

The whole drone story is fishy. Drones did not fly over the long distance from Yemen to the Saudi Arabian target; use your common sense. If there were drones, they had to be launched closer or perhaps from sea. Now there is talk of cruise missiles which makes far more sense. Maybe there were one or two drones spotted but the bulk of the damage was by missiles? Who knows? You will never know the actual truth.

Nonetheless, oil prices will react in the near-term. You can save yourself 5 or 10 bucks by filling up the gasoline tanks today and also the containers for the lawn mower. Oil prices may be 25 cents higher by Friday in the States. As mentioned, the pop in price should be short-lived.

Interestingly, oil price shocks can precede and act as a catalyst for recessions. The images of burning oil facilities and fields in the Middle East brings back memories of the wells burning during the Iraq War. Folks watching television become anxious as they watch the Middle East burning. Consumer confidence and sentiment suffers. Worried consumers do not spend as much money. Sentiment correlates to retail spending data. Analysts continue proclaiming that the consumer will carry the stock market and economy forward.

Adding to the intrigue, is the Israel elections. Perhaps heightened conflict will bolster Netanyahu's election possibilities. In the world of covert operations, you never know what is actually going on behind the scenes. It is also perplexing that the Saudi facility did not have a moratorium on any planes, drones or flying objects within a couple miles of the plant. The event is smelling more fishy. The world is a corrupt place and few things are as they appear. The Saudi's will not be complaining about a rise in oil prices; it will improve their government budgets.

Oil prices were sliding the last few days and you see the red candlestick from last week. Price came up to tap on the 20-week MA resistance at 63.79 but the oil bulls did not have the strength to punch up through. The bears spanked oil lower from the 20. The 20 MA is also the middle standard deviation band and once the bottom band was violated in early August, the middle band was on tap, which occurs.

The yellow lines show the sideways nature of the chart. The chart indicators are not tipping their hand. Price is simply chopping sideways and will have to make a decision about exiting the sideways symmetrical triangle. The vertical side is 50 to 80; call it 30 bucks. So a breakout higher above the upper triangle trend line at 67.50 would target 97-98 for the weeks ahead. A breakdown from 58-ish would target 28-ish. The latter scenario carries more clout with the global economy slowing down. However, again, especially in the near and short-term, oil prices will pop higher. The geopolitical tensions are the oil bulls best friend.

The timing of the attacks occurs exactly when price is testing the lower trend line of the triangle. How convenient. Of course it does. Watch the 20-week MA at 63.79. It is a big deal to get above this resistance since the bulls could not last week. The 50-week MA at 65.46 is next; watch that closely. Then there is the triangle top trend line at 67.50. Above that, oil price may seek the 70-72 level to tap on the upper standard deviation line. Keystone's 80/20 Rule says 8's lead to 2's so a breach of 68 likely hints that 72 is coming down the pike.

As the smoke clears, literally, Brent Oil likely chops through 58-68 for the weeks ahead. Oil begins trading Sunday evening in the States time-wise, this evening, as daybreak hits in Australia, Japan and Asia, so that will tell the tale for prices. The damage assessments during the next couple days are key and will send oil prices to and fro depending on the extent of the damage. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 6:00 PM EST: Bingo. Brent oil explodes +19% higher above 70. Price tags 71.95. S&P futures tank -18. Dow -160. Nasdaq -64. Russell -11. The US 10-year yield is at 1.90%. President Trump says the strategic oil reserve can be tapped if needed.

Note Added 6:20 PM EST: Brent oil is up 7.82, +13%, to 67.88. WTIC oil is up 6.49, +12%, to 61.23. S&P futures -11. Brent is hanging around....... wait for it...... 67.50-ish which is the upper trend line of the sideways symmetrical triangle pattern. Price popped to 72-ish because the 68 was breached. Watch the 50-week MA support at 65.46 and the battle at 67.50-ish.