Short term, oil price is going up and down with economic growth, as demand can oscillate much faster than supply. Weakness is oil is IMO simply a proxy for weakness in the economy. There is very little the White House or Congress can do about oil prices, other than taxes the hell out of it to reduce dependency.
Oil is definitely weak... since the recent economic news is so depressing and anemic, there is no ways it should be as high as it currently is, notwithstanding its recent drop.. it's still too high. A fair price for Brent is about $70-80 per barrel, not more (WTI should be at about $60), if using fundamental analysis and the rules of supply and demand.
You are right. However, this is an election time. As I said earlier, Obama will do whatever it takes to win, even if it means manipulating oil price to the downside. So far, shorting oil has been one of my better trades this year. Please note the H&S pattern in USO. These are all nothing but derivatives, I don't think it trades with the fundamental at all. Ideally, with the current supply status, oil should be at $250 or more. Besides, the higher it is, the more likely people will move away from it (the purpose is actually very good - to reduce foreign oil independence). It's election time, let's get with the program. Short oil. Then when oil settles lower at $50-60, betcha the printing press is gonna be cranked up like there's no tomorrow.
Yes, he definitely can. What's with the timing of SPR release? The timing was very suspicious and I watch the support levels of these HFT-traded ETFs and futes. And the continuous blaming of speculators? Ahhh, it must be the "evil speculator" who manipulate oil to the upside, then it's the bad economy that brings is to the downside - even with the current supply constrain? If I look at the downtrend channel, next target for USO is around $33. Everybody thinks that because they're printing money (wait, it's called QE so people won't think it's actually Weimar), they can't manipulate oil to the downside.... well, I guess most have been wrong The monetary base chart looks super sweet. Just waiting for the kaboom. Should be fun when it finally does I've profited handsomely from this trade and took some off the table today.... could be a little bounce before the next leg down in oil. I hope everybody who follows this thread also makes some profit.
Neither speculators nor SPR have any meaningful impact on crude prices. We'll just have to agree to disagree. Differences make a market etc.
It's too soon. Its going down for a reason other than the election which is more than a year away. Probably too much supply combined with a little higher dollar.. True, it will go down before the election but that usually does not start until mid summer of the election year, 2012, or a precipitous drop say in the Fall before the election (folks have a short memory). Tricks that have worked in the past are to release from the strategic reserve, or in the Bush II re-election, move the CEO of Goldman to Treasury and a month later have Goldman change the weighting of Gasoline futures in the GSCI causing gasoline futures to be dumped on the market! Now that was clever.
Someone gets it here +1 for piezoe ... Yes, that was a very clever move. We will see something like that again sooner... +10% move on DTO alone and did anyone buy the 2012 jan 30 puts on uso? mwahahahah It's been awesome. Congrats to those who made $$$ on this trade. Please donate some to your local red cross, if you're so inclined
Lots of folks have been expecting weakness is crude, and played accordingly. That wasn't the issue under discussion. The issue was the cause of the weakness. Onwards and upwards...