Oil Weak Relative to Stocks and Gold

Recent posts have looked at several markets that have been lagging following the stock market lows of early last week. Those include small cap stocks, the number of overall stocks making fresh 20-day highs, financial stocks and shares in Japan, and let's now include crude oil (USO; above chart). While stocks and gold are trading above their 10/29 highs, oil is well off that mark. Let's see if early morning strength in oil can bridge that gap. As we approach the October bull highs in stocks, I'm watching these potential divergences among risk assets closely.

Comments

[Aspiring He...:]

10.2m unemployed in the US.

No job = no money for car/petrol = lower demand.

There's already plenty of reports that oil is being overstocked.

Will oil be trading higher in a year's time? I'm 80-90% certain that it will.

Will it be trading higher in a month's (or week's) time? I'm not so sure.

That's the problem with drawing conclusions from graphs and correlations - it doesn't take into consideration a lot of other real life factors.

How easy is oil to store compared to gold or holding equities? The physical cost of holding oil is a lot greater than the other two...

Nov 09 01:17 PM

[JeffDB:]

I would expect oil to be lagging this time of year, it's pretty much an annual phenomenon.

Demand in the U.S., still the world's largest market, has historically dropped off after the summer driving season.

Prices will typically tend to head back up as we head towards spring.

Nov 09 02:24 PM

[Ferdinand E...:]

I don't think that it's a good idea to tell the OPEC bosses that oil is 'weak'. They may take that as a challenge, and jack the oil price up by 20 or 30 dollars.

Nov 09 02:41 PM