USO Oh Well...maybe not bear...Depends on your time fram I guess but for may...this is just a correction north to 60 IMO It should Look like this...2 day, 10 day and 50 day SMA...Maybe GL 46 to 58 range <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1444101>
I disagree, last summer clearly pointed out that fear of reduced supply most definitely drives the futures. Watching the Nymex live data in reaction to news will also reveal this. Why look at 1980 to justify what will happen today? We wouldn't pull up a 27 year chart to put on a short term trade with a stock, why do it with CL? Global opinion has changed drastically since the '80's. I understand you are stating your opinion for a bull oil market and I agree that CL is still in bull mode, but geo-political fears and hurricanes cannot be discounted in the equation, a lack or abundance of either the former or latter will have a meaningful effect. Remember the false report of an attack on Iran several weeks ago? The fastest price increase ever seen on the Nymex ensued...that's fear.
Price for oil will go up in the next 3 to 6 months. Reasons: 1. China 2. India 3. Iran 4. Iraq 5. Summer
What I think has happened is that the NYMEX WTI contract has gotten out of synch with the global oil market, so for the moment Brent seems to be a better barometer for oil worldwide than CL due to the glut at Cushing. Brent is trading around 67.20 at the moment and WTI is 64.40, and was trading at a premium of more than 6 dollars in the last week or two. The Dubai Mercantile Exchange is getting ready to list an Oman crude oil contract that will be a sour crude variety and should take away some of the volume of the other two benchmarks that have been in competition with basically only one another up to this point. The ICE is also listing a Middle East sour that begins trading on 5/21. The pricing of the sour contracts and that of Brent should be taken into consideration when looking at the price of oil, as it is arguable that the CL contract is now being affected more by particulars of the delivery point than by the underlying fundamentals of the commodity. I am not a conspiracy theorist, and Matthew Simmons and other peak oil alarmists have little credibility this early on in my opinion, but the fact is that we produce and consume damn close to 85 million barrels a day, and while demand keeps increasing supply does not. Rig counts may be high, but those rigs are sucking less and less oil out of the ground, and it is only with new technologies that we are able to keep up current supply levels. There may be a pullback to the mid to low 50's, but barring a total economic meltdown I don't think we'll go much lower and if we do get that low I would be buying all of the outer year futures and/or options that I could.
Logic says: for something to be not true...all you have to do is show that one time.... now this Oil correlation with war mamboo Jamobo is shown to be not true...not once , 2 times...maybe 100 times.. so should it work this time? This is when Economics + Political science was tought togeather... this whole thing is BS Supply and demand....Which is really the price so price commands to where it should be...Maybe give that a try. not some politicians that put this text books and Newspapers. GL
Look at it this way for a change U Like tomatoes...right?... say Tomatoes is at $1/lb a year latter Tomatoes goes to 2$ demand is still the same from last year so price depends on demand? Demand depends on price?... I say niether...Price depends on price people find other ways which makes demand go down...and so does the price. in all cases price find thier way and Traders do not. "Nothing depends on something else"
Tomatoes are much more price elastic than energy; there are other vegetables that can be substituted for tomatoes if the price gets too high. Conversely there are few alternatives to oil for motor fuel at this point, and the global economy is largely dependent on petroleum to fuel its growth...at least for now, which makes petroleum much more price inelastic. Eventually there would be a price which would cause significant demand destruction, but it doesn't appear that we haven't gotten there quite yet...
As I pointed out earlier, oil has been in a macro bull market since the late 90s. The recession and the 9/11 attacks failed to bring the oil market down. When something is in emotion, it usually stays in motion until it hits a wall. If the wall isnt strong enough to stop it then it goes right through it. Nothing seems to stop oil from advancing. It will keep advancing until the target is reached. There will be ups and downs. There will be events that will both encourage and discourage it such as recession and other events. However, I have confidence that we will reach the target before an oil bear sets in.
Commodities such as oils are cyclicals. Oil can someday go to $200 but doesn't mean it won't first touch $20.
USO Might Correct this May to 54 Area I think this week seems want to drop a little I attached a word file with some charts GL