Oil Won't Drop Forever 14 comments
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Per last Sunday's report to subscribers, mentioned here in Monday's post, the price of oil has continued falling after OPEC decided last weekend to keep production at current levels. Crude's price per barrel is down another 13% since last Friday's close.
The reason is that recession data keeps getting uglier. Auto sales in November hit a 26-year low. The holiday shopping season is off to a slow start. The financial crisis looks to be moving from mortgages to credit cards, according to Meredith Whitney, managing director of Oppenheimer & Co., who told the Financial Times that she's "more bearish" than at any time during the last 18 months.
The oil market still believes that demand will stay slow for some time, and that OPEC and other producers will have little control over the price of the commodity, even if they reduce output.
Yet, the recession will end one day end and when it does, demand from China and India will resume and the finite supply of oil will become more dear. I continue to think we're coming up on a great moment to invest in oil.
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This article has 14 comments:
jimrogers-investments..../
I'm sure most people will agree oil will eventually go up, the question is by how much, how fast, how long. Without some guidelines on this information simply speculating that "oil will go up" is a bit useless for investors.
The market is so volatile and no one knows what will happen tomorrow.
I am only a small potato. I don't have too much money to invest and need to be very careful. I can also say "oil will go up" but it has no meaning at all.
Having mentioned OPEC, they say they will announce a major cut in output at their next meeting. A real cut in output would ramp up the cost of oil. Understand that it is just talk and they are unable to really circle the wagons and do so . But! Selling the day before that meeting would probably be a wise move. Buy the dips, sell the news. Matter of fact, keep an eye on the daily support and resistance and buy and sell within those values as you really have no idea where anything will be from week to week.
It's mentioned that oil will drop to $41 BBL. And there is talk of even further drops. As it is capex is way down. (That means that there is a reduction in drilling) and eventually price will 'run up' violently.
People use different vehicles for their oil play. The new triple ETFs act too jerky for my liking and DIG/DUG seem to have both been dropping as of late. I'm guessing because the day traders that used them have abandoned them for the new triples. If you want something a little less gut wrenching, I'd suggest playing DXO and DTO ... They move more smoothly and have a good enough volume that you shouldn;t be stuck with something you can't sell. In fact, I just bought some DXO at $3.13. The lowest it has ever traded is $2.90. So my stop is $2.80 and I'll sell at that stop, or when oil runs back to $56 or so, or the day before OPEC's meeting Dec 19th.
jegan ;-)
www.oiltradersblog.blo...