Interesting, but it seems that there is no decline in oil supplies. There may be a slight numbers change from week to week but it appears that the economy is slowing down in China, the U.S. and other major markets. What is you idea of medium term.......from now to Christmas? Currently, the price of oil is $44.08. I don't see if going too much higher....it might go as high as $50 or even $52........but it won't stay there long. The oil producing nations can't afford to reduce their supplies of oil on the market. Russia, Saudi Arabia, Venezuela ......their economy and their national budgets are almost wholly dependent on revenues for oil. Saudi Arabia 90%, Venezuela 95%, Russia 50%. They can't afford to reduce oil production. They are selling every barrel they can to make up for the lost revenues from higher prices. There will be no production freeze from OPEC. With or without Iran's cooperation. They have always made agreements, but they have never stuck to them. What they want to do is for OTHER nations to agree to production cuts with the new, higher prices while THEY continue to produce oil at the regular rates or higher. OPEC members want everyone else to sacrifice but themselves. The production rates of OPEC nations are a national secret, as well as their known reserves. They are not team players. Yesterday, I saw unleaded gas in the Dallas (Arlington) area at $1.72 a gallon......Three weeks ago it was 1.95. Oil goes up and down everyday. It has gone up and down 1,2,3 percent almost everyday for the last month. Even if gas went back up to $2.00 or even $2.25 ... (at the retail price in my area ), I would still consider it within the acceptable range of movement. What is your idea of gas rising in the medium term.......$55......$60.........$75 a barrel to Christmas? Just wondering, because even movement from 38- 52 maybe $55, would still be within a normal range of movement from the current 44. Thanks for your post. BTW, how did you become a columnist for The Street? Did you send seek them out as a free lance journalist or did they approach you? Just curious.
@DallasCowboysFan I agree with your observations and also most of the logic. I am 99% chartist and base my outlook using the charts. It has a flaw by not digging in deeper to the fundamentals and supply and demand. When I wrote the piece for thestreet i got a nice little buy signal on the weekly chart. It since made an "ok" move but failed after that. Currently what I see on the weekly chart is lower lows and lower highs which is normally bearish. However I did get a signal that suggests possible short term bottom around $39. I think , like you said moves between $39 and $52 are acceptable moves within the range...except that in our business it can translate to large losses or wins.... I would need to see a daily close above $52 to get excited on possible $60 and a daily close below $39.80 to get excited of another run lower. In between plenty of range to have fun with ( although last three days or so I noticed decline in intraday volatility). As far as thestreet.com, our marketing people connected with them and showed them samples of pieces I wrote/ write etc.
Good post; most likely not a big flaw with fundamentals. Even though like the trader said that shorted Citigroup stock-fundamentals WIN in the end .
How about them CL bears? Guess they be hibernating, hiding from the Saudis, who caved into Iran's demands! And now we are facing a very cold winter across the northern hemisphere. Sure, let's short oil through next spring. Uh huh.