Venezuela has the largest oil reserves in the world, with 298.35 billion barrels compared to the US’ 33 billion barrels. Inflation there is expected to surge to 1,660% this year and 2,880% next year, according to forecasts by the International Monetary Fund. How could a country with such great resources be having such an economic crisis?
Oil has been consolidating and as expected found support around $51. This level is support because it was clearly defined resistance four times over the past 15 months. It failed and had a significant selloff from this level in October of 2015, in early June, and again in October. If the $51 level breaks there could be a meaningful move lower. $43 was support in September and November.
XOP – S&P 500 Oil & Gas Exploration & Production ETF – The XOPs spent over a month consolidating around $42 but they have broken through the bottom of their recent range and are testing support around the $40 level. The $40 level was resistance in August, October, and November of 2015, and again over the past few months.
OIH – VanEck Vectors Oil Services ETF – The OIHs are consolidating around $34 after breaking their recent uptrend. The $31 level is important because it was resistance in June and October, and again in November before they broke out. If they head lower there will most likely be support at this level.