Oil's unfinished business could mean more pain ahead

US oil prices have tumbled nearly 40 per cent at their extremes since May, bringing down the cost of gasoline as well, but technical analysis suggests there is still a danger of another move higher, reports Reuters.

The issue is that oil charts are littered with unfinished business in the form of two price gaps, one from May 19-20 and another from June 12-15, according to data supplied by LSEG.

Gaps are unfilled spaces on price charts that occur in many different markets. Traders believe such gaps must eventually be filled, meaning prices typically trade back through that range before settling on a new direction.

With oil currently trading around $70 a barrel, the nearest gap sits between the June 12 close of $84.88 and the June 15 open of $81.40. Renewed friction between the US and Iran this week pushed crude just above $76, edging closer to that zone but not yet closing it.

The second, more distant gap lies between the May 19 close of $107.77 and the May 20 open of $104.12.