‘Responsible role’ played by Saudi Arabia fueled sell off in oil leading it to go back to sub $80 per barrel. Their pledge is to keep markets supplied despite its increasing isolation from the West over the killing of their journalist Jamal Khashoggi. Overall global equity sentiment has been on the negative adding to the already weaker black gold. When the sanctions against Iran begin on November 4, the market may be amply supplied thus leaving the fate of oil in the hands of bearish traders. The oil losses mounted higher after American Petroleum Institute (API) reported a huge build up of 9.88 million barrels of US crude oil inventories for week ending October 19.
In the daily chart, brent oil has easily gone past the 50% Fibonacci retracement level and is now resting on the 61.8% retracement level at 76.01. The rapid sell off from 50% to 61.8% signals a lot of pressure on oil. Technically, the levels of $73 may be attempted before it heads back towards $80. The momentum indicator RSI hovers at 35.4 closer to 30 slowly entering the oversold zone.
Oil going past the 4 yr high was short lived (just 21 days) though in a longer trend channel there may be some bounce back towards the $86 levels after it retraces from $73-74 a barrel. See trend channel in the monthly chart below.